By Professor Amath Ndiaye, FASEG/UCAD
The launch of Senegal’s Debt Treatment Plan (PTDS) and the agreement reached with the International Monetary Fund represent a major turning point in the management of the Senegalese financial crisis. According to economist Amath Ndiaye, these two decisions should be commended. They signify a break with the “utopian economic sovereignty” that characterized the initial directions of President Bassirou Diomaye Faye’s regime.
A return to reality
The IMF’s statement on September 1, 2026 marks a significant change. The institution explicitly states that “the authorities have announced their intention to seek debt treatment to restore its sustainability.” The focus is no longer simply on improving debt management or optimizing the debt portfolio: it is now about restoring its sustainability.
At the same time, the Senegalese authorities and the IMF have reached a technical agreement on a 36-month program, with financing of around 2.2 billion dollars, equivalent to approximately 1,245 billion CFA francs. This agreement is subject to approval from the IMF’s management and Executive Board.
This reconciliation marks a welcome break from the utopian economic sovereignty that largely influenced President Diomaye Faye’s first government. This approach, which tended to underestimate external financial constraints and the need to quickly restore partners’ confidence, has cost the country nearly two precious years.
Economic sovereignty does not mean isolating oneself from the IMF, World Bank, markets, or international investors. It means being able to negotiate with them in the national interest while strengthening one’s own economic and financial capacities.
However, the 1,245 billion CFA francs over three years should not create an illusion: they remain far below the state’s financing needs, which exceed 6,000 billion CFA francs for the year 2026 alone. The strategic interest of the agreement lies less in its amount than in the confidence and leverage it can generate with donors, creditors, and investors.
An inevitable budget adjustment, but not a structural adjustment
Debt treatment cannot yield sustainable results without a parallel recovery in public finances. The agreement includes an increase in domestic resources and a rationalization of public spending.
The equation is simple: restructuring a debt that has become unsustainable today while maintaining excessive deficits would lead to the reconstitution, a few years later, of a new unsustainable debt stock.
However, it is important to avoid confusion. This is not a structural adjustment program similar to those of the 1980s and 1990s. We are primarily focused on macroeconomic and financial stabilization: a gradual reduction of the budget deficit, restoration of debt sustainability, improvement in public finance management, and reforms aimed at enhancing economic efficiency.
The effort to protect vulnerable groups must also be acknowledged. Increasing family allowances and better targeting subsidies are positive steps. It is economically more efficient and socially fairer to concentrate public resources on households in real need rather than maintaining generalized subsidies that also benefit the most privileged categories.
Budget adjustment will be inevitable and likely challenging. Its success will also depend on social justice.
Dealing with debt without causing a banking crisis in the UEMOA
The government has made another important choice: to exclude debt denominated in CFA francs from the announced scope of the PTDS, particularly to preserve the regional financial market.
This choice is understandable and, in principle, desirable. A sudden restructuring of Treasury Bills and Bonds held by Senegalese and UEMOA banks could lead to significant losses, require provisioning or recapitalization, and reduce their capacity to finance the economy. It is crucial to prevent a Senegalese sovereign debt crisis from turning into a regional banking crisis.
However, this does not mean that UEMOA banks will necessarily be completely shielded from the effort. External creditors may demand a sufficiently balanced sharing of the restructuring effort among different categories of creditors.
Negotiations with regional banks could focus on less destabilizing mechanisms: voluntary maturity extensions, securities exchanges, or reprofiling, rather than a sharp principal haircut.
There is also a major question regarding international private creditors. The treatment of Eurobonds, loans from international banks, structured financings, and especially TRSs will need clarification. A debt treatment aimed at truly restoring its sustainability cannot ignore such a significant component of indebtedness for long.
Restoring confidence to boost investment and growth
The PTDS and the agreement with the IMF are not an end in themselves. They are primarily prerequisites for the revival of the Senegalese economy.
Economic growth is expected to be below 3% in 2026. Such growth is insufficient for an economy that needs to create jobs on a massive scale, finance its infrastructure, and improve the living standards of a rapidly growing population.
The priority must be to restore the conditions for resuming public and private investments, both domestic and foreign.
Debt treatment should reduce servicing and refinancing needs. Budget adjustment should gradually restore balances. The agreement with the IMF should rebuild confidence and facilitate the mobilization of concessional financing from the World Bank, AfDB, and other partners, as well as prepare for the return of private investors.
The emerging strategy is based on a coherent sequence: debt treatment, budget recovery, concessional financing, confidence restoration, investment revival, and a return to stronger growth.
The PTDS and the agreement with the IMF should be hailed as a major strategic turning point. Unfortunately, two precious years were lost under the influence of a utopian economic sovereignty that did not correspond to the realities of an open economy, heavily indebted and structurally in need of capital.
Senegal has now embraced economic truth. The road ahead will be challenging, and some temporary measures will inevitably be unpopular. But the economic and social cost of inaction would be much higher.
Prof. Amath NDIAYE
FASEG – UCAD
