The restructuring of Senegal’s debt has emerged as the most pressing economic challenge facing President Bassirou Diomaye Faye’s administration. The revelation by the Court of Auditors that the country’s debt levels exceed earlier estimates has created a tighter financial landscape than anticipated. Identifying a financial advisor to spearhead the technical, legal, and diplomatic aspects of the restructuring is now a prerequisite for engaging creditors.
Recalibrated debt levels reshape budgetary priorities
The revised public debt figures, combined with a debt-to-GDP ratio that surpasses the West African Economic and Monetary Union (WAEMU) benchmarks, have altered the dynamics with financial partners. The previously agreed program with the International Monetary Fund (IMF) remains on hold until a new agreement is reached, based on consolidated data. This delay temporarily undermines investor confidence and complicates access to concessionary financing.
Debt servicing now consumes an increasingly large share of fiscal revenue, limiting the resources available for critical projects outlined in the Senegal 2050 development roadmap. The dual challenge—meeting short-term obligations on eurobonds and bilateral loans while safeguarding investments in energy, infrastructure, and food sovereignty—has intensified. Without an orderly restructuring, credit risks could worsen, as evidenced by multiple downgrades from major rating agencies.
Selecting the right financial advisor for a strategic overhaul
The appointment of a financial advisory firm or specialized consultancy marks the first operational step in the restructuring process. Past examples across Africa highlight different models. Ghana partnered with Lazard and Hogan Lovells to restructure its external debt in 2023 and 2024, while Zambia also relied on Lazard. Chad and Ethiopia turned to other firms under the G20’s Common Framework. Each engagement required a blend of financial expertise, legal precision, and sovereign diplomacy.
For Senegal, the stakes extend beyond technical competence. The chosen advisor must navigate simultaneous negotiations with eurobond holders, bilateral creditors—particularly China and France—and multilateral institutions. Additionally, regional banks heavily exposed to Senegal’s sovereign debt in the WAEMU bond market will play a key role. The discreet nature of the selection process reflects the political sensitivity of the dossier, especially as Prime Minister Ousmane Sonko advocates a firm stance against historical creditors.
Rebuilding trust with the IMF and global markets
Securing a new program with the IMF remains central to any credible restructuring scenario. Without an Extended Credit Facility or equivalent arrangement, negotiations with private creditors would face heightened uncertainty. Investors typically require a budgetary trajectory validated by the IMF before committing to debt restructuring. The principle of comparable treatment among creditors, a cornerstone of the Paris Club framework, will inevitably influence discussions.
On the secondary market, Senegal’s eurobonds have traded at significant discounts for months, signaling expectations of a rescheduling or nominal haircut. While this could create opportunities for opportunistic buybacks, it demands liquidity that the state cannot easily mobilize. Innovative mechanisms, such as debt-for-nature or debt-for-development swaps—successfully trialed in Gabon and Cabo Verde—may emerge as viable alternatives in the advisor’s toolkit.
The political dimension looms large. The Diomaye-Sonko tandem built its legitimacy on promises of sovereign autonomy and fiscal discipline. A well-executed restructuring would reinforce this narrative; a misstep or unfavorable terms could expose the government to sharp criticism. The coming weeks will determine whether Dakar can turn financial constraints into a catalyst for credibility.
