IMF chief optimistic Senegal will reach agreement with creditors

The International Monetary Fund (IMF) said on Wednesday it is optimistic that Senegal will be able to renegotiate its debts, although uncertainty remains over how long this will take.

Speaking in Bangkok during the annual meetings of the IMF and World Bank, its head expressed confidence in Dakar's ability to secure a deal that would help address its debt crisis.

Kristalina Georgieva said the IMF would support Senegal with a staff-negotiated agreement for a $2.2 billion programme.

The IMF managing director added, however, that the debt treatment was being worked out between Dakar and its creditors.

She said its success would demonstrate that improvements to the G20 debt treatment framework were working.

The initiative was launched in November 2020 by the G20 and the Paris Club to help low-income countries with unsustainable debt manage insolvency or liquidity problems.

It has long been criticised for the slow pace of negotiations, particularly in the cases of Zambia and Ghana.

"My conversations with key creditors show everybody understands this is the test case to the playbook we have adopted through the Global Sovereign Debt Roundtable," she said.

"It is very important that we demonstrate that yes, indeed, the G20 common framework is improved, enhanced, and it can deliver results quickly,” she said.

Her comments come as Senegal seeks to emerge from a financial crisis triggered by the discovery in 2024 of undeclared public debt incurred by the previous administration.

Audits have since led to a reassessment of its debt at approximately 130 per cent of GDP, including state-owned enterprises and government guarantees.

These revelations resulted in the suspension of a previous IMF programme and a decline in investor confidence.

Dakar is hoping an initial disbursement could be made as early as November, ahead of an agreement in principle with its creditors in December.

However, the IMF has not announced any timeline.