Senegal: what an IMF programme changes in the management of public finances

Senegal has just passed an important stage in its negotiations with the International Monetary Fund (IMF). On 1 September 2026, IMF staff and the Senegalese authorities reached an agreement on economic policies that could form the basis of a thirty-six-month programme worth about US$2.2 billion. The agreement is not yet final: it still requires approval by IMF management and then by the Executive Board, and several conditions remain to be met, particularly on debt treatment and financing assurances.

The meeting in Washington on 15 September between President Bassirou Diomaye Faye and IMF Managing Director Kristalina Georgieva confirmed both sides’ intention to move quickly. The following day, the IMF welcomed the progress made while Senegal continued its discussions on the treatment of its debt.

BOX — How much control does the State retain over its budget?

An IMF programme does not formally remove the budgetary powers of the Government or Parliament. The Government still prepares the budget and Parliament still votes on it. The Fund does not decide which school must be built, which tax must be introduced or which expenditure must be cut.

The constraint lies elsewhere. Access to financing is tied to a programme containing quantified targets, agreed reforms, an implementation timetable and periodic reviews. The State retains the choice of specific measures, but it no longer determines on its own the limits within which those measures must fit, the pace at which they must be implemented or the criteria by which their implementation will be assessed.

Legally, the powers remain national. In practice, their exercise is tightly framed by commitments on which continued financing depends.

Criticism of adjustment programmes has long focused on this point. If a State no longer fully controls the framework of its fiscal policy, the timetable for carrying it out and the conditions under which it is reviewed, part of what is usually understood as budgetary sovereignty is exercised within a relationship of financial dependence. The IMF describes the same arrangements as safeguards for the use of its resources and as conditions for restoring financial stability.

A debt burden that changed the terms of the discussion

The starting point is now well established. The IMF estimates Senegal’s total public-sector debt at 132% of gross domestic product (GDP) at the end of 2024. GDP measures the value of goods and services produced in a country over a given period. Expressing debt as a percentage of GDP makes it possible to compare the burden of debt with the size of the economy, although the ratio alone does not show whether a State will be able to repay.

Part of this debt had not been properly reported in previous years. The issue led the IMF to halt the previous programme and now requires Senegal to provide stronger guarantees about the quality of its public accounts. The new agreement remains conditional on “decisive corrective measures” connected with the misreporting of data.

The size of the debt is only one part of the problem. How the State records, contracts, publishes and monitors its liabilities is equally important.

The proposed programme accordingly places strong emphasis on fiscal transparency, debt management, the monitoring of arrears and oversight of state-owned enterprises. An arrear is an expenditure that the State should already have paid but whose settlement has been delayed. Accumulating arrears shifts a burden into the future, sometimes without making it as visible as a new loan.

US$2.2 billion: financing, but not an unconditional cheque

The headline figure is substantial: about US$2.2 billion over three years.

An IMF programme is not a single payment placed freely at the Government’s disposal on the first day. Funds are generally released in stages, according to a timetable and after periodic reviews.

The Extended Credit Facility (ECF) is the instrument being used here. It provides concessional financing to low-income countries facing persistent balance-of-payments difficulties. The balance of payments records a country’s economic transactions with the rest of the world: exports, imports, investment, borrowing, repayments and other financial flows.

Alongside the financing, Senegal gains a framework that may encourage other lenders to commit resources. The IMF says the programme could help to unlock additional financing from the World Bank, the African Development Bank and other partners.

This signalling function matters. An IMF agreement often tells other lenders that the accounts have been examined, a programme exists, targets have been set and implementation will be monitored.

The reassurance offered to lenders comes with a political and budgetary constraint: public finances must follow a path judged compatible with debt repayment.

‘Mobilising domestic revenue’: raising more money at home

The vocabulary used by financial institutions sometimes needs translating into ordinary language.

The proposed programme calls for stronger “domestic revenue mobilisation”. The expression mainly refers to the State’s ability to raise more revenue within the country: taxes, duties, improved collection, the reduction of some exemptions and action against fraud.

Senegal plans to adopt a medium-term revenue strategy in 2027. The stated aim is to increase the resources available to finance priority expenditure.

For taxpayers and businesses, this may prove one of the most sensitive parts of the programme. Raising revenue can mean broadening the tax base — bringing more activities or income that were previously lightly taxed or untaxed into the system — but it can also mean improving a tax administration that does not always collect what existing rules already require.

The two approaches do not have the same effects. Raising rates on those who already pay tax may increase their burden. Better collection from activities that previously escaped taxation may spread the effort more widely.

The programme does not itself decide who will pay more. That will depend on the measures proposed by the Government and examined through Senegal’s political institutions.

‘Rationalising expenditure’ does not simply mean cutting it

Another recurring expression is “expenditure rationalisation”.

It can mean reductions, but also a change in the composition of spending: ending expenditure judged ineffective, targeting a subsidy more precisely, postponing an investment, reducing some administrative costs or redirecting resources towards other priorities.

The IMF says the planned fiscal consolidation should include protection for vulnerable households, notably through targeted cash transfers: direct payments to households meeting defined criteria, intended to cushion part of the adjustment.

This arrangement raises a practical difficulty. Effective targeting requires the administration to know who should receive support. That requires reliable registers, understandable criteria and payment mechanisms that actually reach the intended beneficiaries.

The social component will be judged as much by administrative capacity as by the amount entered in the budget.

Restoring debt ‘sustainability’

The term appears repeatedly in IMF documents.

Debt is considered sustainable when a State can continue servicing it — paying interest and repaying principal as it falls due — without continually accumulating new arrears, relying on unrealistic financing or imposing an adjustment on the economy that cannot be maintained.

Debt service refers to the sums payable over a period in interest and principal repayments.

The distinction matters. A country can have a very high level of debt and continue to pay if it has sufficient revenue, long maturities and manageable interest rates. Conversely, a lower level of debt can trigger a crisis if large repayments fall due in a short period or interest rates have become too burdensome.

Senegal has announced its intention to seek debt treatment. Discussions include possible recourse to the G20 Common Framework, an international mechanism designed to co-ordinate debt treatment for certain countries in difficulty. The exact terms are still being negotiated.

This operation may matter as much as the IMF loan itself. Injecting new resources without making the existing debt manageable would address only part of the problem.

Does the IMF dictate economic policy?

Whenever an African country negotiates with the Fund, this issue returns.

The Government negotiates the programme and formally retains its powers. The IMF itself stresses that the decision whether or not to restructure debt belongs to the Senegalese authorities.

But the negotiation does not take place between two parties with equal means. Senegal needs financing and must restore the confidence of its creditors. The IMF can decline to commit its resources if it considers the debt unsustainable or the proposed policies insufficient to correct the imbalances.

Legal sovereignty remains; financial constraint narrows the space in which it can be exercised.

That does not mean every future measure can be described as having been “imposed by the IMF”. Taxation, the composition of expenditure, reform of state-owned enterprises, social protection and the ordering of priorities still leave room for different choices. Political responsibility lies in those choices.

Oil does not remove the need to put the public accounts in order

Senegal’s economy grew by 6.7% in 2025, the first full year of oil production. Excluding hydrocarbons, growth was only 2.2%. In the first quarter of 2026, non-hydrocarbon growth rose again to 4.7% year on year.

These figures show how important the new oil and gas resources have become. They also show why those resources alone cannot settle the fiscal question.

An economy can record strong growth driven by hydrocarbon extraction without tax revenue increasing immediately in the same proportions. Production costs, contracts with operators, investment recovery and the timing of receipts can delay or reduce the share actually available to the State.

Senegal will have to manage three timetables at once: debt repayments, fiscal reforms, and the gradual increase in oil and gas revenue.

How those timetables interact will determine much of the Government’s real room for manoeuvre.

What the programme will allow us to judge

Debate about the IMF is often reduced to an overly simple choice: accept the Fund or preserve sovereignty.

The Senegalese case requires a more precise reading.

The country must regain access to financing, deal with a very heavy debt burden, repair the mechanisms that allowed part of its public liabilities to go unreported, and at the same time protect expenditure needed for the economy to function and for social protection.

The proposed programme will provide instruments, financing and a form of reassurance to Senegal’s partners. It will also introduce quantified constraints, periodic reviews and a timetable for reforms.

Assessment will rest on concrete choices: which expenditure is protected, which revenue is sought, who bears the adjustment, and what rules are put in place to prevent the same difficulties from returning?

The outcome will not be visible only in the debt ratio. It will also have to be assessed through schools and hospitals, public investment, the tax burden, household conditions, employment, businesses and the administration’s ability to account for its decisions.