Senegal can handle investor concern, says IMF
Senegal ’ s diversified funding sources mean it could be better placed than some countries to handle investor concern sparked by political uncertainty, after President Macky Sall delayed a presidential election, says the IMF.
A significant portion of Senegal’s funding is on concessional terms, and a planned reduction in issuing more expensive syndicated loans will minimise its dependence on volatile private debt, a spokesperson for the fund said in emailed comments.
The abrupt postponement of the February 25 vote until December plunged the oncestable country into crisis, intensifying a backlash against what many see as a bid to extend Sall’s mandate and undermine one of the remaining democracies in coup-hit West Africa.
Three people were killed and about 270 reportedly detained during the protests that swept the capital Dakar and several other Senegalese cities late last week, raising fears of protracted unrest.
“Recent political developments in Senegal have created some uncertainty, potentially impacting investor confidence and economic activity,” said the IMF spokesperson.
“While potential investor caution could lead to higher interest rates and tighter financial conditions, Senegal may be better positioned than some to navigate potential investor concerns due to its diversified and less volatile funding sources.”
In a December report, the IMF noted that Senegal had borrowed more in 2023 to cover its 2024 financing needs, ” to avoid interest rate spikes as the 2024 presidential elections approach”. That caution could pay dividends.
“Senegal does not plan further debt issuance in 2024, a move that would require parliamentary approval,” the IMF spokesperson said.
Nonetheless, Senegal needs to stay on track with planned economic reforms to maintain debt sustainability, the IMF said.
Senegal ’ s public debt-toGDP ratio climbed to an estimated 79.6% in 2023, but was forecast to fall to 72.5% in 2024, the IMF said in December. Senegal secured a three-year loan of about $1.9bn from the IMF in June 2023. /