Senegal's 2025 Budget Proposal

DAKAR (Reuters) – Senegal anticipates a budget deficit of approximately 7% of gross domestic product in 2025. This figure is notable as it reflects a decrease from the 10% revealed in a recent audit which triggered a halt on the country's $1.9 billion IMF programme.

The IMF package, which was agreed upon in 2023, remains on hold following the audit that uncovered larger debt and deficit figures than previously reported by the outgoing administration. This discrepancy has led to increased yields on the West African nation's dollar bonds and subsequent credit rating downgrades.

The audit, commissioned by newly elected President Bassirou Diomaye Faye, indicated the deficit at the end of 2023 was over 10%, in contrast to the roughly 5% claimed by the prior government. Reports suggest that a new IMF programme or the resumption of the existing arrangement will not occur before June 2025.

The budget proposals, which will soon be reviewed by the new parliament, advocate for a "prudent" debt policy, relying on traditional donors to finance projects in 2025 and beyond. The government also plans to bolster domestic finance, eyeing a potential 1,500 billion CFA ($2.41 billion) domestic diaspora bond market as per the proposed budget.

The government, alongside donors and investors, is awaiting a final audit report from the Court of Auditors, anticipated by mid-December. The budget proposal indicates that integrating the Court's public finance audit results will prompt an upward revision of outstanding debt and debt service, particularly for 2024 and 2025.

Given the current debt level, the government intends to negotiate repayment terms with investors to distribute payments and enhance sustainable debt management. This proactive debt management will also involve issuance on international markets to facilitate smooth debt servicing, especially for 2026 and 2027, ensuring debt sustainability and freeing up budgetary space.

Looking ahead, next year's economic growth is projected at 8.8%, buoyed by this year's initiation of oil production, though it may experience challenges due to a slowdown in secondary and tertiary activities, according to government insights.

($1 = 623.5000 CFA francs)