The Senegalese government's financial situation has taken a turn for the worse, with the recently submitted 2026 Supplementary Finance Bill (PLFR 2026) revealing a budget deficit of 7.6% of GDP. This comes as a result of various economic challenges faced by the country between 2024 and 2026. According to reports, the country's energy subsidies have increased by a factor of 3.2, while fiscal revenue has declined by 453 billion FCFA. The government's debt, previously hidden, has been estimated at around 300 billion FCFA.
A closer look at the economic situation reveals that the causes of these challenges are structural, rather than conjunctural. The dissimulation of the country's debt between 2019 and 2024 led to a real debt of approximately 100% of GDP, compared to the 65.9% that was initially reported. In September 2024, the government suspended its program with the International Monetary Fund (IMF), which had provided $1.8 billion in funding. As a result, the government turned to the UEMOA financial market, issuing bonds and treasury bills at higher interest rates of 6-10%, compared to 1-2% previously.
The construction and public works sector has been severely impacted by the economic challenges, with many projects coming to a halt. This has had a ripple effect on the private sector, with small and medium-sized enterprises (SMEs) struggling to stay afloat due to delayed payments from the government. The sector, which accounts for over 8% of Senegal's GDP and employs hundreds of thousands of people, has seen its debt to the banking system increase significantly. According to estimates, the sector's debt stands at around 600 billion FCFA, with 300 billion FCFA in outstanding payments and 269 billion FCFA in tax refunds.
The government's decision to rely heavily on the UEMOA financial market has had negative consequences, including a significant increase in debt servicing costs. The interest and commissions on public debt have increased from 1,190.6 billion FCFA to 1,285.2 billion FCFA, a rise of 94.6 billion FCFA. This increase is a direct result of the country's deteriorating credit rating, which has made it more expensive for the government to borrow.
The government's Plan de Redressement Économique et Social (PRES), launched in August 2025, aimed to increase revenue and reduce dependence on external debt. However, the plan's projections were overly optimistic, with only 90 billion FCFA in revenue generated, compared to 700 billion FCFA projected. The 2026 finance bill has revised these projections, multiplying them by 8.5, but this has resulted in a shortfall of 451 billion FCFA.
The decline in revenue has been attributed to the failure of the PRES to meet its targets, as well as a decline in tax revenue from various sources. The tax on games of chance, for example, was expected to generate 300 billion FCFA, but only 120 billion FCFA was collected. Similarly, taxes on peanut exports and gold exports were not collected, and the expected revenue from land regularization was not realized.
The PLFR 2026 has highlighted the need for a new approach to economic management, with a focus on credibility and growth in the productive sector. The government's priorities include gradually reducing domestic debt, restarting key projects, restoring confidence among financial partners, supporting the private sector, and strengthening independent evaluation of public policies. With the return of the IMF and the appointment of a new prime minister, Ahmadou Al Aminou Lô, the government is expected to shift its focus from confrontation to results.
Key points
- The Senegalese government's economic challenges between 2024 and 2026 were marked by a large budget deficit, increased energy subsidies, and a decline in fiscal revenue.
- The country's debt, previously hidden, has been estimated at around 100% of GDP, compared to the 65.9% that was initially reported.
- The government's priorities include gradually reducing domestic debt, restarting key projects, and restoring confidence among financial partners.
