Every leader eventually faces tough, unpopular choices—even when they know the long-term stakes outweigh short-term political winds. As former U.S. President Bill Clinton once reflected, ‘Tough decisions often come with a political cost, but doing what’s right can pave the way for future stability.’
The economic realities facing Senegal today reflect this tension between political timing and fiscal responsibility. A growing public debt, rising interest burdens, and shrinking fiscal space are testing the government’s ability to balance immediate political concerns with sustainable economic health. At the center of this challenge is the urgent need to restructure or reprofile debt before the situation spirals beyond control.
Understanding Senegal’s debt burden
The numbers tell a sobering story. After two years of detailed assessment, the latest official data reveals that Senegal’s public debt reached 23,666.8 billion CFA francs by the end of 2024—equivalent to 118.8% of GDP, excluding parastatal debt and arrears. More concerning, debt servicing alone consumed 4,357.5 billion CFA francs in 2025, fully absorbing total tax revenues. This leaves no room for new public investment unless additional borrowing is secured.
By 2026, the projected debt service reaches 5,498 billion CFA francs, while expected tax revenues are only 5,384.8 billion. The gap is widening, and the government is increasingly forced to borrow just to meet existing obligations. Without structural change, this cycle risks pushing the country into a liquidity crisis.
Can fiscal reforms bridge the gap?
In August 2025, the government launched the Plan de Redressement Économique et Social (PRES), aiming to generate 3,173 billion CFA francs in additional tax revenue between 2025 and 2028. The plan includes direct tax hikes and indirect measures expected to boost economic activity. It also targets 1,091 billion CFA francs from asset recycling and state land monetization.
Yet early results raise questions. By the first quarter of 2026, only 54.2 billion CFA francs had been collected—far below the optimistic projection of 300 billion by year-end. Even if these targets are met, they would barely offset a fraction of the debt burden. Senegal’s tax-to-GDP ratio remains at just 18.9%, well below its potential of 25.3%, constrained by structural issues like the informal economy and low digitalization of tax administration.
Historical trends show sluggish progress: tax revenues grew by only 7% from 2023 to 2024, while real non-oil GDP growth averaged just 2.7% over the same period. With debt service now exceeding 100% of tax revenue, there is little room for optimism that internal fiscal reforms alone can stabilize the situation in the short term.
The refinancing trap
Facing limited access to international capital markets, the government has increasingly turned to regional borrowing through the UEMOA market. In 2025, Senegal raised 4,004 billion CFA francs—four times the amount raised in 2024—through public bond issuances. But these new loans come at a cost: interest rates on domestic issuances have risen from 3.4% to 7–8% in 2026, with shorter maturities. This increases the average cost of debt and accelerates refinancing pressure.
The result? The total central government debt rose by 1,531.68 billion CFA francs in 2025, reaching 25,198.48 billion. While the debt-to-GDP ratio improved slightly due to new oil revenue inflows, stripping out hydrocarbon effects reveals a deterioration to 124%. The average interest rate on debt (4.59%) now exceeds Senegal’s non-oil growth rate (2.2%), creating a dangerous imbalance. To stabilize debt at 2024 levels, a primary surplus of +2.7% of GDP would be required—but the actual deficit was –1.8% in 2025 and is projected at –246 billion CFA francs in 2026.
Why delay means deeper crisis
The government has ruled out outright debt restructuring, favoring internal consolidation and refinancing. But each year of delay increases the financial and economic cost. As debt ratios rise, future refinancing becomes more expensive, crowding out private investment and limiting public spending on essential services. The longer the government waits, the more painful the eventual correction will be.
The recent creation of a General Directorate of Financing and Debt is a positive step toward better coordination. However, institutional reform alone cannot resolve a crisis rooted in unsustainable arithmetic. The only viable path forward lies in pragmatic negotiations with all creditors—multilateral, bilateral, and commercial—to extend maturities, lower interest rates, and potentially accept nominal haircuts on select debt tranches.
Inaction is not an option. The longer the government relies on costly refinancing and fails to address the structural imbalance between debt costs and growth, the greater the risk of a debt spiral. Political considerations must not override economic reality. The time for bold, pragmatic action is now—before the fiscal window closes entirely.
