Gambiaj.com – (DAKAR, Senegal) – The International Monetary Fund (IMF) has announced that negotiations on a new financial program for Senegal cannot proceed until the government addresses the misreporting of key economic data under former President Macky Sall’s administration.

The IMF had already suspended its existing $1.8 billion credit facility to Senegal after a state financial review last month revealed that the country’s debt and budget deficit were significantly higher than previously reported. Senegal’s Court of Auditors confirmed that by the end of 2023, the total outstanding debt stood at 99.67% of GDP, far exceeding the 74.41% reported by the previous government.

Speaking in Dakar on Monday, IMF mission chief Edward Gemayel said the organization was open to a new program but stressed that resolving the issue of misreporting was a prerequisite. “We cannot discuss a new program before we settle on the misreporting,” he stated, though he added that once this was addressed, the IMF could move “very, very fast.”

Senegal’s Finance Minister Cheikh Diba has expressed hopes for a new IMF program by June, but Gemayel did not confirm that timeline. He also declined to speculate on whether Senegal was at risk of a credit event such as debt restructuring or default, stating it was “too early to make that call.”

Subsidy Cuts and Economic Reforms

As part of broader economic reforms under President Bassirou Diomaye Faye, the IMF has also emphasized the need for energy subsidy reductions. According to Gemayel, fuel subsidies, which have surged to nearly 4% of GDP since the COVID-19 pandemic, disproportionately benefit wealthier households rather than vulnerable populations.

“The problem with these subsidies is that it’s not the vulnerable households that benefit from them,” he said, urging their gradual removal.

Meanwhile, Senegal’s government is expected to release a supplementary budget later this year reflecting the true state of public finances, as highlighted in the Court of Auditors’ report.

Despite the economic challenges, the IMF noted that Senegal’s emerging oil and gas sector could provide a fiscal boost, estimating that revenues from these resources will contribute an average of 1% of GDP annually over the next five years. The country’s energy ministry reported in January that output from the Sangomar offshore oil and gas field had exceeded expectations, reaching 16.9 million barrels in 2024.

With IMF assistance on hold, Senegal’s government faces mounting pressure to rebuild financial credibility while implementing necessary reforms to stabilize the economy.

Source: Reuters