Senegal’s rejected revised 2026 budget has put a planned $2.2 billion IMF loan, its debt strategy and government unity under pressure.
How hidden debt changed the picture
After the 2024 change of government, an audit found earlier public borrowing had been badly understated. For 2019–23, the average budget deficit was 5.6 percentage points of GDP higher than reported. Central-government debt at the end of 2023 was revised from 74.4% to 99.7% of GDP. The IMF later put total public debt at 132% of GDP at the end of 2024.
The revelations halted a previous $1.8 billion IMF arrangement. On September 1, IMF staff and Senegal reached a preliminary agreement on a 36-month, $2.2 billion loan program for 2026–29.
What the proposed budget changes
The loan is not approved or available yet. The IMF says it needs management and board approval, decisive corrective steps related to the misreporting case, and financing assurances from Senegal’s partners. Senegal has also opened a debt-treatment process under the G20’s Common Framework. IMF money could help attract financing from development banks and other lenders.
The IMF has not named passage of this specific budget as a separate condition. But the rejected bill lays out how the government plans to manage spending and the deficit, so the impasse raises questions about its wider plan. The government says revenues fell short as costs, including energy subsidies and security, rose. Its draft would cut CFA 555 billion (about $945 million) in investment spending, raise the projected deficit from 5.4% to 7.6% of GDP, and lower the growth forecast from roughly 5% to 2.7%.
Why lawmakers objected
The prime minister said some projects could be postponed. Lawmakers fear cuts will affect health, education, water and infrastructure. PASTEF lawmakers also cited weak cost-of-living measures, insufficient budget transparency, and a refusal to provide documents or explain special funds. They argued the government should find savings elsewhere before burdening households or shelving public investment. These were the party’s stated reasons, but do not explain every lawmaker’s vote.
A budget fight with political costs
President Bassirou Diomaye Faye and Ousmane Sonko came to power together in 2024. Faye dismissed Sonko as prime minister in May 2026 after months of disagreement, including over how to handle the debt. Sonko still leads PASTEF, which controls parliament, and is now National Assembly president. He previously described debt restructuring as a threat to Senegalese sovereignty, though he later softened his position.
Disputes over energy subsidies affect household costs, while postponed projects affect communities and public services. Senegal can still borrow in regional markets, but that financing costs more than loans from institutions such as the IMF. Five-year bond yields rose to 8.24% at an October auction, from 7.82% two weeks earlier. Rejection does not itself mean default or formally cancel the IMF agreement, but delay can make borrowing and debt negotiations harder.
What could happen next
The next test is whether the executive and lawmakers can agree on a credible budget path. The prime minister had urged lawmakers to propose amendments before the vote. A compromise or revised proposal remains possible, but no new timetable is confirmed. An IMF board decision as early as December was described as a hope, not a set date. It is now at risk, while the Fund’s stated conditions and the need for partner assurances remain.