The Senegalese government has set an ambitious goal: clearing up to 1.9 trillion West African CFA francs (approximately €2.9 billion) in unpaid public bills before the end of the year. This move, announced by a senior official from the Ministry of Economy, Finance and Planning, places small and medium-sized enterprises (SMEs) at the forefront of creditor reimbursement. However, the initiative arrives amid tight budgetary constraints and raises critical questions about funding sources and long-term fiscal sustainability.
Public arrears reveal deeper fiscal strain in Senegal
The staggering 1.9 trillion FCFA figure—equivalent to roughly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA—highlights years of unpaid bills to state suppliers, delayed public procurement payments, and unresolved tax credits. The breakdown between domestic and foreign debt, as well as distinctions between SMEs and large corporations, remains undisclosed. Details on the number of affected businesses and eligibility criteria for early repayments have also not been made public.
This lack of clarity has exacerbated concerns among business leaders. Since mid-2023, employers’ associations such as the National Council of Employers (CNP) and the National Confederation of Senegalese Employers (CNES) have warned of severe disruptions in sectors heavily reliant on government contracts—construction, IT services, and administrative supplies. Reports of bankruptcies, layoffs, and tightened bank credit for state vendors have mounted over the past 18 months.
Hidden debt and accounting discrepancies fuel credibility crisis
The arrears issue gained urgency in February 2025 when Senegal’s Supreme Audit Institution published a damning report. It revealed hundreds of billions in previously unrecorded public liabilities inherited from the previous administration, prompting the International Monetary Fund (IMF) to freeze disbursements under its ongoing program until a full audit was completed. Negotiations for a new funding arrangement are currently underway.
For international lenders, the resolution of domestic arrears is a non-negotiable benchmark. The IMF typically treats the clearance of unpaid state bills as a structural performance indicator, alongside wage bill control and primary surplus targets. While Dakar has not yet unveiled a detailed repayment calendar or financing mechanism—whether through direct cash flows, treasury bond issuance, or tax offsets—donors insist on strong fiscal governance to unlock new credit lines.
Regional benchmarks and political pressure on Dakar
Senegal is not alone in facing this challenge. Côte d’Ivoire between 2012 and 2015 cleared around 800 billion FCFA in domestic arrears by combining direct payments with tradable public securities on the West African Monetary Union (WAEMU) regional market. Benin followed suit in 2019 with a similar scheme targeting local suppliers. In both cases, restoring trust among SMEs preceded a rebound in private investment.
The cleanup operation also tests the fiscal promises of President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko, who took office in April 2024 on a platform emphasizing transparency and economic renewal. Meeting the year-end deadline would send a powerful signal to the private sector, which has seen public spending slow and growth forecasts revised downward over the past year and a half.
The biggest question remains: where will the money come from? Senegal’s Treasury has already tapped the regional bond market in 2025 with yields exceeding 8%—an expensive option. The government must soon decide whether to take on more debt, delay payments further, or use tax offsets. The chosen path will determine whether the announced cleanup brings real relief to creditor SMEs—or simply postpones the reckoning of an already fragile fiscal equation.
What’s next for Senegal’s fiscal reform?
With public trust hanging in the balance and lenders watching closely, the coming months will reveal whether Dakar can turn arrears resolution into a catalyst for recovery—or whether it becomes another chapter in a growing debt dilemma. The stakes are high: restoring liquidity to suppliers, securing IMF support, and stabilizing investor confidence all hinge on the credibility and execution of this initiative.
