Senegal is seeking a new agreement with the IMF, the last of which was in 2023. However, President Bassirou Diomaye Faye ordered an audit of public finances shortly after assuming office. Last month, this review revealed that the country’s public and budget deficits are higher than previously estimated, prompting Senegal and the International Monetary Fund to initiate new discussions.
Reaching agreements with the IMF is essential for Senegal for several reasons. These agreements help stabilize the economy by providing emergency financing during crises, which supports foreign exchange reserves and investor confidence. Furthermore, the IMF often conditions its support on economic reforms that can enhance public finance management, strengthen institutions, and foster long-term sustainable growth.
Thanks to these agreements, Senegal can access loans and funding from other donors attracted by the country's commitment to adopting responsible economic policies. This also enhances Senegal’s credibility on the international stage, demonstrating its dedication to rigorous financial management, which could attract more foreign investment.
The IMF also offers technical expertise and valuable advice, aiding the country in better managing its economic and financial policies. By engaging in these discussions and implementing reforms, Senegal is preparing to prevent potential future economic crises. In short, these agreements represent an opportunity for Senegal to consolidate economic stability, improve financial management, and promote sustainable development.
Currently, however, the agreement with the IMF is on hold and needs to be updated. This was explained this week by Finance Minister Cheikh Diba from Washington, during the annual meetings of the International Monetary Fund, as reported by Bloomberg.
Last year, under President Macky Sall, an agreement was reached with the IMF for the institution to lend $1.8 billion to Senegal. Several disbursements were made last year, and the country was expecting nearly 340 billion CFA francs by the end of the year. However, this money is now unlikely to arrive before 2025, according to Cheikh Diba on Friday.
Last month, Prime Minister Ousmane Sonko announced, following an audit, that the country's deficit was nearly twice as high as previously estimated under the former government, averaging around 10% over four years instead of the previously announced 5.5%. This state of public finances justifies a review of the IMF agreement, and the finance minister hopes discussions will conclude by the end of March.
These discussions are occurring in a very particular context. President Bassirou Diomaye Faye has pledged to renegotiate certain international agreements for several reasons. He aims to restore what he considers "sacrificed sovereignty" abroad. Beyond the agreements with the IMF, the deals he wants to renegotiate include gas and oil contracts as well as fishing agreements signed with the European Union.
This initiative is part of a broader effort to strengthen Senegal’s economic sovereignty and ensure that the country's natural resources benefit the Senegalese population more directly. By setting up a commission to review strategic contracts, President Faye seeks to ensure that these agreements are fair and genuinely contribute to the country’s development. It is, therefore, no small task that awaits the Senegalese government.