Senegal has rejected claims that it covertly borrowed €650 million to avoid a potential default, insisting its financing operations complied with market transparency rules.
The response follows a report alleging that the government secured funds through arrangements with the Africa Finance Corporation and First Abu Dhabi Bank, granting preferential repayment terms over existing bondholders.
In a statement, Senegal’s finance ministry said the transactions were part of a broader strategy to diversify funding sources and manage rising debt obligations, including covering operational costs and refinancing liabilities.
Officials argued that the deals—structured through domestic sovereign bonds and financial instruments such as total return swaps—offered more favorable terms than those available on international markets, with an interest rate of around 7.1%.
The government also emphasized that the agreements were not concealed and were conducted in line with established transparency standards.
The issue comes amid mounting fiscal challenges. Senegal faces a budget deficit nearing 14% of GDP and public debt estimated at 132% of national output. Earlier this month, the country successfully repaid $471 million in international debt, easing immediate default concerns.
The current administration has accused former president Macky Sall’s government of concealing the true scale of public debt and deficits. These concerns were echoed by the International Monetary Fund, which found discrepancies in fiscal reporting between 2019 and 2023 and has since suspended a $1.8 billion aid program pending further clarification.
The developments highlight ongoing pressure on Senegal’s public finances and the delicate balance between maintaining market confidence and addressing structural economic challenges.
Source: TRT Africa
