Senegal’s debt dilemma: experts explore alternatives beyond the IMF

A significant conference addressing Senegal’s escalating debt crisis recently convened in Dakar. Although Prime Minister Ousmane Sonko was scheduled to patronize the event, he was unable to attend due to illness, as confirmed by Justice Minister Yacine Fall.

In Sonko’s stead, Ayib Daffé, president of the ruling Pastef parliamentary group for work, ethics, and fraternity, delivered remarks. He emphasized the urgent need to expand perspectives and move beyond conventional thinking regarding debt solutions. This implicitly challenged the International Monetary Fund (IMF)’s proposal for Senegal’s debt restructuring, which involves renegotiating loan terms when repayment becomes unfeasible – an option Dakar has rejected.

The imperative for debt alternatives

Economists present at the conference unanimously asserted that Senegal’s foreign debt is unsustainable, a position contrary to previous assurances from national authorities. They stressed the critical need for swift solutions. Economist Souleymane Bah highlighted that the nation’s current state revenues are insufficient to cover both the principal and interest payments owed to international creditors.

“Current state revenues do not allow for the payment of principal and interest,” Bah explained. “What is typically done with this external debt is to borrow more to repay existing loans. With interest rates continuously rising, this is clearly not a viable solution. We must find other alternatives.”

The primary objective of this conference, organized by the Ideas Africa Network think tank, was precisely to explore alternative solutions, as they believe the IMF’s approach is inadequate.

“The IMF’s approach is fundamentally opposed to economic transformation,” argued Ndongo Samba Sylla, a researcher and economist with Ideas. “It’s a purely accounting and pro-creditor stance. The IMF will do everything to lend you money so you can signal your ability to borrow again and pay creditors, but not to invest in genuine economic transformation.”

Among the innovative strategies discussed were reforming the monetary system, potentially exiting the Franc CFA, and advocating for the cancellation of a portion of the debt deemed “illegitimate” due to opaque contracting by the previous administration without proper declaration.

However, a potential contradiction emerged within the governing alliance. While experts in Dakar, under the patronage of Prime Minister Ousmane Sonko, deliberated on solutions independent of the International Monetary Fund, President Bassirou Diomaye Faye was simultaneously in Nairobi, Kenya, meeting with IMF Director Kristalina Georgieva, though no significant breakthroughs have been reported from that encounter thus far.