The African Development Bank (AfDB) has approved 20 billion CFA francs ($35.4 million) in financing to help Senegal strengthen its public finance management as the West African country continues efforts to address its debt challenges.
According to a statement from the bank, the financing will support domestic resource mobilisation, structural reforms, and improvements in public finance management and transparency.
The AfDB did not specify whether the financing would be provided as a grant or a loan.
“Through this operation, the African Development Bank reaffirms its commitment to standing alongside Senegal to consolidate economic reforms, strengthen domestic resource mobilisation, and create the conditions for more resilient growth,” said Wilfrid Abiola, Head of the AfDB’s Senegal Country Office.
The financing comes as Senegal works to strengthen its public finances after the government disclosed previously unreported debts in 2024 that eventually exceeded $13 billion.
The country is also negotiating a new programme with the International Monetary Fund (IMF) after the Fund suspended its previous credit facility.
Senegalese officials have said they are pursuing measures other than a sovereign debt default to meet the IMF’s debt sustainability requirements.
As part of its broader efforts to restore fiscal stability, Senegal is expected to appoint Lazard as its financial adviser on debt matters, according to sources familiar with the process.
Reuters reported in July that the government had launched a selection process to appoint a financial adviser, with such appointments often viewed as an early step in preparing for discussions with creditors, although they do not necessarily indicate that debt restructuring is imminent.
According to the Reuters report, Lazard is expected to work alongside Paris-based Global Sovereign Advisory (GSA), which Senegal announced in November was serving as a financial adviser to the government.
The report also noted that Senegal has repeatedly ruled out a sovereign debt restructuring and has continued relying on regional financial markets for funding, even as borrowing costs remain elevated, international market access remains constrained and financing needs continue to grow.
Reuters further reported that some investors increasingly believe debt restructuring may become unavoidable. In a note to clients published in July, Citi analysts said:
“Assuming that Senegal is committed to an IMF program, our base case is that a debt renegotiation will be necessary, and we view a muddle through scenario as increasingly unlikely.”
The analysts added:
“Our external debt renegotiation scenario assumes a large nominal haircut will be required.”
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