The management of Senegal’s public debt is at a critical crossroads, where political timing clashes with economic necessity. This delicate balance is not unique to Senegal, but the figures reveal a stark reality: the country’s debt service now consumes more than its total tax revenues, leaving little room for maneuver in public spending.
When political cycles meet economic sustainability
Every leader faces tough choices, but the challenge intensifies when short-term political considerations collide with long-term economic stability. The theory of public choice, developed by economists James M. Buchanan and Gordon Tullock in 1962, highlights this tension. It underscores how electoral calendars often prioritize immediate wins over structural reforms—something Senegal’s debt situation exemplifies.
Recent evaluations reveal a troubling trend: Senegal’s public debt stood at 23,666.8 billion CFA francs by the end of 2024, equivalent to 118.8% of GDP. Worse, debt servicing—principal, interest, and commissions—swallowed 4,357.5 billion CFA francs in 2025 alone, entirely consuming tax revenues. The outlook for 2026 is no brighter, with projected debt servicing reaching 5,498 billion CFA francs against expected tax revenues of just 5,384.8 billion.
This means Senegal must borrow simply to repay existing debt, leaving no fiscal space for new investments or essential public services. The question now is whether the government’s current strategy—relying on internal fiscal adjustments and debt refinancing—can break this unsustainable cycle.
The limits of fiscal consolidation in the short term
To address this imbalance, Senegal launched the Economic and Social Recovery Plan (PRES) in August 2025, aiming to generate an additional 3,173 billion CFA francs in tax revenues between 2025 and 2028. The plan also targets 1,091 billion CFA francs from the recycling of state-owned land assets. However, early results are underwhelming. By the end of the first quarter of 2026, only 54.2 billion CFA francs had been collected, with optimistic projections capping the year at 300 billion—far below the target of 703.6 billion for 2026.
Why the gap? Tax revenues are not infinitely elastic. Their growth depends on structural factors like GDP expansion, the size of the informal sector, and fiscal administration efficiency. Senegal’s tax-to-GDP ratio was 18.9% in 2025, well below the 25.3% potential highlighted in studies. Even without new taxes, closing this gap would take three to six years. Meanwhile, debt servicing remains the government’s top financial obligation, consuming more than total revenues in 2025 and projected to rise further in 2026.
Why refinancing is a risky gamble
With external capital markets largely inaccessible, Senegal has turned to the West African Economic and Monetary Union (UEMOA) regional market. In 2025, the state raised 4,004 billion CFA francs through public bond offerings—a fourfold increase from 2024—but at a steep cost. Interest rates on new debt ranged from 6% to 8% in 2026, up from 3.9% on existing debt. The average maturity of new loans also declined, increasing refinancing risks.
Refinancing only makes sense if new debt is cheaper than the old. In Senegal’s case, the opposite is true. The average interest rate on domestic debt (5.3%) already exceeds that of foreign-currency debt (3.4%). The 70% share of new borrowing from the UEMOA market only deepens this imbalance, as these loans carry higher rates and shorter maturities. Far from easing the burden, refinancing accelerates debt accumulation.
The debt snowball effect
The consequences are already visible. By the end of 2025, central government debt rose by 1,531.68 billion CFA francs to 25,198.48 billion, though the debt-to-GDP ratio improved slightly to 112%—thanks to hydrocarbon-related GDP growth. Without this boost, the ratio would have surged to 124%.
Three key indicators shape debt dynamics:
- Average interest rate: At 4.59% in 2025, it outpaced non-hydrocarbon GDP growth (2.2%), worsening the debt burden.
- Primary balance: A deficit of -401.7 billion CFA francs (-1.8% of GDP) in 2025 means revenues don’t even cover non-interest expenses, let alone debt servicing.
- Stabilizing primary balance: To stabilize debt at 2024 levels (119% of GDP), Senegal would need a +2.7% primary surplus—far beyond the current -1.8%.
Projections for 2026 are equally alarming. The government expects a primary deficit of -246 billion CFA francs, a debt interest rate of 4.79%, and a growth rate of 3.2%. Even with a slight improvement, the stabilizing balance remains unattainable, risking a debt spiral.
Beyond institutional reforms: the need for economic pragmatism
In response, Senegal has created a new Directorate General for Financing and Debt to centralize debt management—a step toward stronger institutional governance. But structural reform alone won’t solve the arithmetic of unsustainable debt. The crisis demands bold financial pragmatism: renegotiating maturities, interest rates, or even nominal haircuts across creditor classes (multilateral, bilateral, commercial). Delaying these measures only deepens the cost—both fiscally and economically—by crowding out private investment and squeezing public spending further.
Ideological stances may shape political fallout, but they cannot override economic imperatives. Postponing tough decisions will only make the inevitable reckoning more severe.
