Senegalese authorities have set an ambitious target: settling public arrears amounting to nearly 1.9 trillion FCFA (approximately $3.2 billion) before the current fiscal year concludes. The announcement, led by a senior official from the Ministry of Economy, Finance, and Planning, prioritizes small and medium-sized enterprises (SMEs) as the first wave of creditors to receive payments. While the technical framework for this financial overhaul remains under development, the urgency reflects a precarious budgetary landscape in Dakar.
What does 1.9 trillion FCFA in public arrears mean for Senegal’s economy?
The staggering sum—roughly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA—highlights years of unpaid bills to state suppliers, delayed public contracts, and unresolved tax credit claims. Key details remain undisclosed, including the split between domestic and foreign arrears, the number of businesses affected, and the criteria for the first round of payments.
This opacity has fueled concerns among Senegalese business leaders. Organizations like the National Employers’ Council and the National Confederation of Employers of Senegal have warned that over 60% of some sectors—such as construction, IT services, and administrative supplies—depend on public contracts. Since mid-2023, delayed payments have triggered bankruptcies, layoffs, and a credit crunch for state suppliers.
Hidden debt and the weight of unpaid obligations
The arrears crisis cannot be separated from Senegal’s February 2025 audit by the Supreme Audit Institution, which exposed hundreds of billions in unrecorded liabilities inherited from previous administrations. This revelation prompted the International Monetary Fund (IMF) to freeze its ongoing program, demanding a comprehensive audit before resuming disbursements. Negotiations for a new IMF program are ongoing.
For lenders, clearing domestic arrears is a litmus test. The IMF classifies this as a structural performance criterion, alongside wage bills and primary balances. A verifiable repayment plan—whether through direct cash payments, treasury bond issuances, or tax offsets—is critical for securing a new Extended Credit Facility agreement.
Regional precedents and political stakes in Dakar’s debt cleanup
Senegal isn’t the first West African nation to tackle arrears. Côte d’Ivoire resolved 800 billion FCFA in domestic arrears between 2012 and 2015 using a mix of direct payments and tradable public securities. Benin followed a similar model in 2019. Both cases demonstrated that restoring SME confidence can spur private investment.
For President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko, who took office in April 2024 on a platform of fiscal transparency, delivering on this commitment is both an economic and political imperative. Meeting the year-end deadline would send a strong signal to the private sector, which has faced 18 months of contracting public demand and downgraded growth forecasts.
The challenge lies in funding the payouts. Senegal’s 2025 treasury bond issuances, which have seen rates exceed 8% in the regional market, are an expensive option. The government must weigh additional borrowing against payment deferrals and fiscal offsets to determine whether this debt cleanup will relieve SMEs—or simply defer an unsustainable fiscal imbalance.
What’s next: transparency, timing, and trust
The success of this operation hinges on three factors: clear eligibility rules, a transparent disbursement timeline, and sustainable funding sources. Without these, the 1.9 trillion FCFA repayment risks becoming another bandage on a deeper fiscal wound—delaying the very recovery Senegal’s economy depends on.