Senegal’s Debt Service Profile and Fiscal Outlook
Mamadou Lamine GUEYE
![Mamadou Lamine GUEYE]()
Mamadou Lamine GUEYE
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Senegal's public debt continues to grow, with significant implications for its fiscal health in 2024. This report provides a detailed overview of Senegal’s total debt, debt service obligations, the budget for 2024, and associated revenue and deficit figures. It also analyzes the fiscal and economic challenges faced by the government in light of its debt burden.
Debt Structure Overview (2024)
Total Public Debt:
Total Debt Stock: Estimated at 16.6 trillion CFA francs (~$27 billion), representing approximately 80% of GDP
External Debt: Comprising 66.8% of the total debt, mainly consisting of Eurobonds, multilateral loans (from the World Bank, IMF), and bilateral loans from countries like China and France
Domestic Debt: Accounts for 33.2%, primarily issued through the WAEMU bond market in CFA francs
Debt Service
Total Debt Service Payments:
Debt service obligations for 2024 are projected to consume 30-35% of government revenues, a significant portion of fiscal resources
External Debt Service: Includes Eurobond repayments and multilateral and bilateral debt, accounting for about 20-24% of export revenues
Domestic Debt Service: Payments on Treasury bills and bonds account for 33-35% of total debt service obligations
Budget for 2024
Total Government Budget:
Budgeted Public Spending: 5.8 trillion CFA francs (~$9.5 billion) for 2024, representing around 25.7% of GDP. The budget prioritizes sectors like infrastructure, education, health, and energy
Key Allocations:
Public Investment: The budget includes substantial allocations for infrastructure projects, particularly in roads, ports, and energy, which are vital for supporting economic growth
Subsidies and Social Programs: Energy subsidies and social protection programs remain key parts of the budget, ensuring affordability of essential goods and services for the population
Revenue Projections:
Revenue Mobilization: Expected to contribute around 19.4% of GDP (~4.6 trillion CFA francs) in 2024, with significant emphasis on enhancing tax compliance and expanding the tax base
Oil and Gas Revenues: The new oil and gas fields, beginning production in late 2023, are expected to contribute significantly to government revenues in 2024
Fiscal Deficit:
The fiscal deficit is expected to narrow to 3.9% of GDP in 2024, driven by better revenue collection and fiscal reforms
Debt Service Burden Analysis
External Debt Service:
The external debt service burden is a major factor in the fiscal profile, with substantial repayments due for the Eurobonds issued in 2018. The total amount due in 2024 will contribute to higher debt servicing costs
Domestic Debt Service:
Domestic debt service, financed through Treasury bills and bonds, continues to be a manageable portion of total debt servicing, though it represents a larger share of the total debt service burden than external debt
Fiscal Challenges
High Debt Servicing Costs:
Debt servicing will continue to absorb a significant proportion of Senegal’s revenue, reducing the government’s ability to fund social and infrastructure investments effectively.
Energy Subsidies:
Energy subsidies, particularly for electricity and fuel, continue to be a substantial fiscal burden. These subsidies are essential for social stability but also place pressure on the national budget
Mitigation Strategies
Revenue Enhancement:
Tax reforms are a key focus for the government, with a projected increase in tax revenue as a percentage of GDP. This includes efforts to expand the tax base, reduce informality, and improve tax collection mechanisms
Hydrocarbon Revenues:
The oil and gas sector is poised to significantly contribute to Senegal’s fiscal revenue from 2024 onward, providing some relief to the debt servicing burden
Debt Management:
Senegal’s debt management strategy focuses on refinancing Eurobonds and increasing reliance on domestic debt, which helps mitigate foreign exchange risks
Conclusion
Senegal’s fiscal outlook for 2024 is shaped by substantial debt service commitments, which remain a key challenge to economic sustainability. While the government is undertaking significant efforts to increase revenues and manage the debt burden, it faces fiscal constraints due to high debt repayments and energy subsidies. However, the potential increase in revenues from the hydrocarbon sector and the implementation of fiscal reforms offer pathways to reduce the fiscal deficit and enhance fiscal stability in the medium term.