Over the past year, Senegal’s public debt has emerged as the primary point of contention between the government led by Prime Minister Ousmane Sonko and the Bretton Woods institutions. On Monday, May 11, economists from across Africa and Asia convened in Dakar, initiating discussions aimed at outlining potential strategies to navigate this financial predicament. This initial gathering sets the stage for a more extensive conference, scheduled for Tuesday, where the head of government is expected to participate. The declared objective is clear: to present a heterodox economic perspective that challenges the conventional, orthodox remedies often advocated by the International Monetary Fund (IMF) and the World Bank.

Public debt at the core of the standoff with the IMF

The sustainability of Senegalese public finances has fueled a tense debate, particularly since the upward revision of the national debt stock inherited from the previous administration. Official figures underwent correction, subsequently leading to the suspension of several disbursements under the program agreed upon with the IMF. Dakar now finds itself in a challenging position: it must uphold its international financial commitments while simultaneously funding the ambitious social pledges made by Pastef, the ruling political party.

The forum convened this week underscores a deliberate political stance. Rather than acceding to the fiscal adjustments typically demanded by creditors, the executive branch is actively seeking to construct a robust technical and academic argument in favor of alternative solutions. Participants are expected to explore various avenues, including orderly debt restructuring, extending maturity periods, and significantly boosting domestic resource mobilization. The inclusion of Asian economists, hailing from nations that have successfully navigated their own balance of payments crises, is intended to enrich this discourse, which has historically been heavily influenced by Western economic paradigms.

A strategic political message to financial partners

The timing of this gathering is no mere coincidence. By bringing together prominent critics of austerity measures just weeks after discussions with the IMF effectively paused, Ousmane Sonko is sending a clear signal to Senegal’s financial partners. The Prime Minister, a central figure in the significant political shift witnessed in 2024, has made economic sovereignty a defining characteristic of his administration. His direct involvement in the upcoming conference elevates its significance far beyond that of a standard academic seminar.

For the organizers, the primary goal is to demonstrate that viable policy space exists beyond traditional financial programs. This stance aligns with a broader movement observed across the African continent, where several governments are increasingly questioning the conditionalities attached to multilateral financing. Recent experiences in countries like Ghana, Zambia, and Ethiopia, involving debt restructuring, have generated a wealth of literature from which Dakar intends to draw lessons. It is worth noting, however, that unlike these neighbors, Senegal is not formally in default, thereby retaining, albeit limited, access to regional financial markets.

Exploring credible alternatives to austerity measures

Fundamentally, the alternatives put forth by the economists engaged in the forum revolve around several key pillars. The first centers on fiscal policy: expanding the tax base, combating illicit financial flows, and renegotiating specific extractive contracts, particularly within the hydrocarbon sector, where production commenced in 2024. The second pillar addresses the very architecture of the debt, proposing instruments denominated in local currency or indexed to future revenues. The third highlights the importance of regional coordination, specifically within the framework of the West African Economic and Monetary Union (UEMOA).

These proposed solutions are not without inherent complexities. A firm stance towards the IMF could potentially increase the risk premium demanded by investors, even as the Senegalese Treasury remains reliant on regular issuances in the public securities market. Furthermore, any renegotiation would inevitably necessitate dialogue with Eurobond holders, whose interests often diverge from those of bilateral creditors. Practically speaking, the government’s political latitude will depend on its ability to skillfully articulate a sovereign discourse while simultaneously projecting signals of financial credibility.

Beyond the official pronouncements, the developments unfolding this week in Dakar will be closely monitored by sub-regional capitals and international rating agencies. This sequence of events could either foreshadow a new phase of negotiations with lenders or, conversely, prolong a financial confrontation whose budgetary cost continues to escalate each quarter. The forum’s conclusions are slated to be presented to the government upon the completion of its work.

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