Senegal’s government has formally committed to settling a massive backlog of public arrears totaling 1.9 trillion FCFA—roughly 2.9 billion euros—before the end of the current fiscal year. The announcement, delivered by a deputy minister at the Ministry of Economy, Finance and Planning, places small and medium enterprises (SMEs) at the front of the creditor queue. While specifics of the settlement method remain under wraps, the move arrives at a time when Dakar’s public treasury is stretched thin, raising questions about the long-term sustainability of such an operation.
The hidden roots of Senegal’s staggering public arrears
The 1.9 trillion FCFA figure—equivalent to about 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA—is no random number. It reflects years of unpaid invoices to state suppliers, delayed public procurement settlements, and unresolved tax credits. What’s particularly striking is the lack of transparency: authorities have not yet disclosed details such as the split between domestic and external arrears, the number of affected businesses, or the eligibility criteria for the first wave of payments. This opacity not only fuels skepticism among stakeholders but also obscures the true scale of the crisis.
Senegal’s private sector, especially SMEs, has borne the brunt of this financial strain. According to the latest data, over 60% of some key industries—including construction, IT services, and administrative supplies—depend heavily on government contracts. The prolonged delay in payments has triggered a domino effect: widespread business failures, layoffs, and a sharp reduction in bank lending to state suppliers. These ripple effects have been documented extensively over the past 18 months, painting a sobering picture of an economy increasingly starved of liquidity.
Uncovering the accounting black holes: what the audits reveal
The issue of arrears cannot be examined in isolation from the February 2025 report by Senegal’s Court of Auditors, which exposed previously unrecorded public liabilities totaling hundreds of billions of FCFA. The revelation sparked immediate international scrutiny, leading the International Monetary Fund (IMF) to suspend its ongoing program with Senegal and demand a comprehensive audit before resuming disbursements. Negotiations for a new credit facility have been underway since, with the IMF emphasizing the resolution of domestic arrears as a critical structural benchmark—on par with wage bill control and primary balance targets.
For Dakar, clearing these arrears isn’t just a fiscal exercise—it’s a litmus test for credibility. A transparent, verifiable payment plan—whether through direct cash payments from treasury receipts, securitization via Treasury bills, or tax credit offsets—will be essential to restoring donor confidence. Without it, the path to a new IMF-supported program remains blocked, and Senegal risks further financial isolation.
A regional playbook? Learning from neighbors who faced the same storm
Senegal is not alone in this challenge. Côte d’Ivoire successfully phased out approximately 800 billion FCFA in domestic arrears between 2012 and 2015, using a mix of direct payments and tradable public securities on the West African Monetary Union (WAEMU) market. Benin followed a similar route in 2019, clearing arrears owed to local suppliers. In both cases, restoring trust among SMEs preceded a rebound in private investment and economic growth.
For the Bassirou Diomaye Faye–Ousmane Sonko administration, which took office in April 2024 on a platform of fiscal transparency and systemic reform, the arrears clearance is more than a financial maneuver—it’s a political imperative. Meeting the year-end deadline would send a powerful signal to the private sector, which has grown increasingly wary after 18 months of shrinking public contracts and downgraded growth forecasts.
The real test lies in funding. With Senegal already issuing high-yield Treasury securities in 2025—some at rates exceeding 8%—taking on additional debt to settle arrears may prove counterproductive. The government faces a delicate balancing act: choose between piling on more debt, extending payment schedules, or leveraging tax offsets. The choice it makes will determine whether this effort truly alleviates pressure on creditor SMEs or simply postpones the inevitable reckoning of an already fragile fiscal balance.
