The question of debt restructuring in Senegal is now a major economic issue facing President Bassirou Diomaye Faye’s administration. After a court revealed a higher level of debt than previously claimed, Dakar must navigate a tighter financial equation than expected. The appointment of a capable pilot for the technical, legal, and diplomatic aspects of the operation is the first step towards any negotiations with creditors.

Un recalibrated debt changes the fiscal budget’s game

The reevaluation of public debt and a ratio of debt to Gross Domestic Product (GDP) significantly above UEMOA community standards has altered Senegal’s negotiating power with financial partners. The program previously concluded with the International Monetary Fund (IMF) is suspended, pending a new agreement based on consolidated figures. This pause deprives the state of a signal of confidence from markets and complicates access to concessionary financing.

The debt service absorbs an increasing share of fiscal revenue, reducing the government’s maneuvering space to finance its transformation economic agenda outlined in the Sénégal 2050 roadmap. The tension is double: honoring short-term payment obligations on eurobonds and bilateral loans while preserving structural investments in energy, infrastructure, and food sovereignty. Without a well-ordered restructuration, the risk of default would intensify, as major rating agencies have already warned through several successive downgrades.

The strategic choice of the financial advisor

The selection of a bank-advisor or specialized consulting firm is the first operational act in debt restructuring. Previous African cases offer several models. Ghana relied on Lazard and Hogan Lovells to orchestrate its external debt refinance in 2023 and 2024, while Zambia also used Lazard. Chad and Ethiopia have used other cabinets within the G20 framework. Each of these mandates has mixed financial expertise, legal engineering, and sovereign diplomacy.

For Dakar, the challenge goes beyond mere technicality. The selected advisor must articulate a simultaneous dialogue with eurobond holders, bilateral creditors, including China and France, as well as multilateral creditors. It must also navigate with regional banks heavily exposed to Senegal’s sovereign debt on the UEMOA public securities market. The discretion surrounding the competitive process reflects the political sensitivity of the dossier, particularly in a context where Prime Minister Ousmane Sonko is defending a firm stance against historical creditor partners.

A dialogue to rebuild with the IMF and markets

The resumption of an IMF program remains the key to any credible scenario. Without eased credit terms or equivalent instruments, a debt restructuring agreement with private creditors would be fragile. Investors traditionally condition their participation in a validated fiscal trajectory by the Bretton Woods institution. The principle of comparable treatment between creditors is essential for negotiations.

On the secondary market, Senegal’s eurobonds have been traded with significant discounts since several months, reflecting anticipation of a restructuring or a nominal coupon cut. This configuration theoretically opens up the possibility of opportunistic buybacks, but it requires available liquidity that the state cannot easily mobilize. The use of innovative mechanisms such as debt-for-nature exchanges or debt-development experiments in Gabon and Cape Verde could be explored by future advisors.

Rests the dimension of politics. The Diomaye-Sonko duo has built its legitimacy on promises of a sovereignist break and fiscal management renewal. A well-conducted restructuration would reinforce this narrative; an unsuccessful technical approach or an unfavorable agreement would expose power to contestation fueled by criticism.

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