The government of Senegal has confirmed its commitment to settle public arrears totaling 1.9 trillion FCFA (approximately $2.9 billion) before the current fiscal year ends, positioning PMEs at the front of the repayment queue. The announcement, delivered by a delegate minister within the Ministry of Economy, Finance, and Planning, arrives amid severe budgetary constraints for Dakar.
Public arrears: a symptom of deeper liquidity strain
The staggering 1.9 trillion FCFA figure represents roughly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA. This accumulation stems from unpaid invoices to state suppliers, delayed public contract settlements, and unresolved tax credits. Authorities have yet to disclose a detailed breakdown between domestic and external arrears, the number of affected businesses, or eligibility criteria for the initial repayment wave.
Public opacity has intensified concerns among business groups. The Senegalese Employers’ Confederation (CNES) and National Council of Employers (CNP) have warned of systemic risks in sectors heavily reliant on public contracts—construction, IT services, and administrative supplies—where over 60% of revenue may depend on state payments. Since late 2023, documented cases include supplier bankruptcies, layoffs, and tightened bank credit for state vendors.
Unrecorded liabilities and IMF scrutiny
The arrears crisis cannot be separated from findings in the February 2025 report by Senegal’s Audit Court, which revised upward the country’s inherited debt by several hundred billion FCFA due to previously unrecorded commitments. This revelation prompted the International Monetary Fund (IMF) to pause its ongoing program and demand a comprehensive audit before resuming disbursements. Negotiations for a new IMF facility remain ongoing.
For the IMF, reducing domestic arrears serves as a structural performance benchmark, alongside payroll management and primary balance targets. A transparent repayment schedule—leveraging cash reserves, Treasury bill issuances, or tax offsets—is seen as essential for securing a new Extended Credit Facility.
Regional benchmarks and political stakes
Senegal is not alone in tackling this challenge. Côte d’Ivoire cleared approximately 800 billion FCFA in domestic arrears between 2012 and 2015 by combining direct payments with tradable public securities on the West African Monetary Union market. Benin adopted a similar approach in 2019 to support local suppliers. In both cases, restored confidence in PMEs preceded a surge in private investment.
For President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko—who assumed office in April 2024 on a platform of fiscal transparency and reform—the current arrears clearance is both a political commitment and an economic test. Meeting the year-end deadline would send a strong signal to the private sector, which has faced 18 months of declining public orders and downward-revised growth forecasts.
The source of financing remains unclear. Regional bond markets, where Senegal has issued debt in 2025 at rates exceeding 8%, offer one costly option. The final approach—fresh borrowing, staggered payments, or tax compensation—will determine whether the planned clearance delivers tangible relief to creditor PMEs or merely defers a structurally imbalanced budget.
