When leaders face tough decisions, they often weigh short-term political gains against long-term economic stability. The words of former U.S. President Bill Clinton—‘Early or late, every president must make difficult, unpopular choices. Yet, doing what is right today may one day bring political rewards’—echo through the corridors of power, especially when economic sustainability hangs in the balance.

The theory of public choice, pioneered by James M. Buchanan and Gordon Tullock in 1962, highlights the tension between short-term political cycles and the longer horizons required for effective public policy. Nowhere is this divide more evident than in Senegal’s ongoing struggle to manage its public debt amid evolving political realities.

Diagnosing Senegal’s debt burden

In July 2025, the Senegalese government released findings from a commissioned study by Forvis Mazars, revealing a stark fiscal landscape: by the end of 2024, the country’s public debt stood at 23,666.8 billion FCFA—118.8% of GDP. Worse still, debt servicing consumed every franc of tax revenue collected in 2025, with 4,357.5 billion FCFA spent on principal, interest, and commissions, while total tax receipts barely reached the same figure at 4,357.5 billion FCFA.

This precarious situation means Senegal must borrow simply to meet existing debt obligations, leaving little room for essential public spending without further indebtedness. The 2026 budget forecasts a debt service requirement of 5,498 billion FCFA, against projected tax revenues of 5,384.8 billion FCFA—an imbalance that underscores the urgency of finding viable solutions.

Fiscal revenue growth: A delayed lifeline

In August 2025, the government unveiled the Economic and Social Recovery Plan (PRES), aiming to generate an additional 3,173 billion FCFA in tax revenue between 2025 and 2028 through new fiscal measures. Of this, 2,111 billion would come from direct revenue increases, while 1,062 billion would result from multiplier effects across the broader economy. Yet, by the first quarter of 2026, actual tax collection stood at just 54.2 billion FCFA, with optimistic projections capping the year’s total at 300 billion FCFA—far below what is needed.

Senegal’s tax-to-GDP ratio remains stubbornly low at 18.9% in 2025, despite a nominal increase from 18.3% in 2024. Structural challenges—including an informal economy, limited digital government services, and constrained fiscal effort—constrain revenue growth. Even without new taxes, the country faces a 6% gap between its potential tax capacity (25.3% of GDP) and current performance, a deficit that cannot be bridged quickly.

The gap between debt servicing and revenue generation is widening. In 2025, debt servicing consumed 106.6% of tax receipts, and projections for 2026 show a 1,000 billion FCFA increase in debt obligations. By 2028, the country will face peak repayments on existing debt, making the short-to-medium-term fiscal outlook increasingly untenable.

Why refinancing is not the answer

The government has relied heavily on regional debt markets within the West African Economic and Monetary Union (WAEMU) to meet financing needs, raising 4,004 billion FCFA in 2025—a fourfold increase from 998 billion FCFA in 2024. However, the cost of this new debt is higher than the debt it replaces. In 2024, yields on WAEMU bonds ranged between 6% and 7%, climbing to 7-8% in 2026 as investors demanded higher risk premiums.

While refinancing delays immediate liquidity crises, it fails to address underlying fiscal imbalances. The effective interest rate on central government debt rose to 3.9% by December 2024, with domestic debt (5.3%) significantly more expensive than foreign-denominated debt (3.4%). The average maturity of domestic debt has also shortened, increasing refinancing risk. With 14.3% of total debt due within a year, the government faces a looming liquidity crunch.

Refinancing under current market conditions does not lower the debt burden—it merely postpones the inevitable. Higher interest rates and shorter maturities mean the new debt compounds the problem, pushing the country closer to a debt spiral.

Rising debt dynamics and structural risks

By 2025, central government debt rose by 1,531.68 billion FCFA to 25,198.48 billion FCFA, though the debt-to-GDP ratio improved slightly to 112%—primarily due to hydrocarbon-related GDP growth. Without this boost, the ratio would have surged to 124%. This underscores the fragility of Senegal’s fiscal position: growth driven by external factors masks deeper structural weaknesses.

Three critical indicators define the debt trajectory:

• Effective interest rate: At 4.59% in 2025, this exceeds the non-hydrocarbon growth rate of 2.2%, accelerating debt accumulation.
• GDP growth: Non-hydrocarbon growth is projected to rise to 3.2% in 2026, yet remains insufficient to offset rising debt costs.
• Primary balance: Senegal recorded a primary deficit of -1.8% of GDP in 2025, meaning tax revenues after excluding debt interest payments were insufficient to cover non-interest expenditures. With a projected deficit of -0.9% for 2026, the country continues to borrow to fund core operations.

To stabilize debt at 2024 levels (119% of GDP), Senegal would need a primary surplus of +2.7% of GDP. Instead, it faces a widening gap, signaling a likely debt snowball effect unless corrective measures are taken.

Beyond institutional reforms: The need for pragmatic solutions

Recent months have seen the creation of a new Directorate General for Financing and Debt Management, a step toward strengthening institutional governance. While such reforms are necessary, they are not sufficient to resolve the current crisis. Quantitative fiscal adjustments alone—whether through revenue increases or expenditure cuts—cannot resolve structural imbalances.

The path forward requires pragmatic economic decisions: renegotiating debt terms with multilateral, bilateral, and commercial creditors; extending maturities; reducing interest rates; or even considering nominal haircuts on select debt tranches. Delaying these measures only deepens the cost of inaction, crowding out private investment and constraining public expenditure.

In the end, political considerations must not overshadow economic realities. The longer Senegal postpones difficult choices, the greater the long-term economic and fiscal costs will be. The time for action is now.