Talya Parker explores how Senegal’s new $2.2-billion International Monetary Fund programme and plans to reprofile its debt could offer a way out of its debt crisis, while making the country a test case for an untested ‘enhanced’ G20 Common Framework

After multiple credit downgrades, eight International Monetary Fund (IMF) missions since April 2024, and a political divorce, Senegal has announced it will reprofile its debt, estimated at 132% of GDP.

Senegal’s problems began in September 2024, when the administration of recently elected President Bassirou Diomaye Faye (2024-present) reported that it had discovered billions of dollars in undisclosed debt and was launching an audit. In February 2025, the Cour des comptes (Court of Auditors) released a report revealing that Senegal’s debt and budget deficit were far greater than the Macky Sall (2012–2024) administration had reported.

The audit, covering the period 2019 to March 31, 2024, found that, at the end of 2023, total outstanding debt equalled 99.67% of GDP, compared with the 74.41% reported by the former administration, and the budget deficit for 2023 stood at 12.3% of GDP, significantly above the reported 4.9%. The IMF estimated that Senegal’s extra debt exceeded $11-billion, equal to approximately 130% of GDP. The IMF suspended its $1.8-billion programme with Senegal, leading to protracted negotiations for a new programme.

The misreported debt levels led to successive credit downgrades by Moody’s, S&P and Fitch, significantly impacting Senegal’s ability to borrow. Senegal began to rely heavily on the regional market to meet its financing needs.

Alongside the regional market, Senegal turned to a more opaque financing option – total return swaps (TRS), an alternative financing solution countries often use to help them secure foreign currency liquidity without tapping the international bond market, which is either not available or too costly.

In Senegal’s case, government issued local currency securities on the regional market and transferred them as collateral to financial institutions. Doing this allows a government to access liquidity quickly and sometimes at lower interest rates, but gives lenders the rights to large amounts of their bonds. Importantly, a TRS is not classified as a loan. Senegal reportedly raised up to $1-billion using TRS from the Africa Finance Corporation, First Abu Dhabi Bank (FAB) and Société Générale. Notably, the IMF has raised concerns about the transparency and sustainability of using TRS as it can complicate debt restructuring. It remains unknown how Senegal will address these concerns.

In the background to these developments, Senegal continued negotiating with the IMF, which was pushing for reforms to be undertaken, including safeguards to ensure that misreporting would not happen again.

However, another challenge to these negotiations came from within the executive itself. Then-Prime Minister Ousmane Sonko had made it clear that he would not allow the country to pursue any debt restructuring, stating that it would bring “shame” to Senegal. The relationship between Sonko and Faye had been precarious since Faye won the 2024 election. Sonko was the ruling Patriotes africains du Sénégal pour le travail, l'éthique et la fraternité (Pastef) candidate, but a criminal conviction prevented him from running for the Presidency. Sonko selected Faye, his aide, to run in his place.

The two were at odds over the IMF programme since negotiations began, especially as the debt restructuring conditions became clearer. After months of tensions, Faye dissolved his government in May and dismissed Sonko from his position as Premier, replacing him with economist Ahmadou Al Aminou Lo. Just weeks before Faye’s decision, Lo confirmed that he was personally handling talks with the IMF over a new programme.

Faye’s difficult political decision and government’s speedy undertaking of reforms have finally paid off, with the IMF announcing on September 1 that it had reached a staff-level agreement on a 36-month $2.2-billion Extended Credit Facility with Senegal. The IMF announcement was followed by Lo confirming to lawmakers that Senegal will reprofile, not restructure, its debt. According to Lo, this will involve extending maturities and renegotiating interest rates, which some investors still consider a form of restructuring. Private creditors have already formed groups and hired firms for this process.

The Economy and Finance Ministry has confirmed that Senegal will continue to pay external debts for now and has agreed to make use of an enhanced version of the G20 Common Framework. Limited details have been released or are known about this enhanced framework, but the Finance Ministry has confirmed that debt denominated in the regional CFA franc – approximately a third of Senegal’s outstanding debt – will be excluded from this exercise, protecting regional banks from losses and maintaining government’s access to what has become its primary funding source.

Ghana, Zambia and Ethiopia made use of the G20 Common Framework when restructuring their debt, but this ‘enhanced’ version is new territory, making Senegal the test case for this new framework. The new version is expected to shorten timelines, improve transparency and prompt earlier coordination among creditors. If successful, it could create a blueprint for future debt-distressed countries.