Senegal’s public debt has rapidly emerged as the primary point of contention between the administration led by Ousmane Sonko and the Bretton Woods institutions within the past year. On Monday, May 11, a gathering of economists from across Africa and Asia commenced discussions in Dakar, aiming to chart pathways out of the current financial crisis. This initial assembly sets the stage for a larger conference, scheduled for Tuesday, where the head of government is expected to participate. The stated objective is unequivocal: to counter the orthodox prescriptions advocated by the International Monetary Fund (FMI) and the World Bank with a fresh, heterodox analytical framework.

Public debt at the core of the standoff with the FMI

Since the upward revision of the debt inherited from the previous government, the sustainability of Senegal’s public finances has fueled a tense debate. Official figures were adjusted, leading to a freeze on several disbursements from the program agreed upon with the FMI. Dakar now finds itself in a precarious position: needing to honor its international commitments while simultaneously funding the social pledges made by Pastef, the ruling party.

The forum convened this week underscores a deliberate political stance. Rather than acceding to the standard budgetary adjustments demanded by creditors, the executive branch is actively constructing a technical and academic argument for alternative strategies. These include exploring avenues such as orderly debt restructuring, extending maturity periods, and enhancing the mobilization of domestic resources. The participation of Asian economists, hailing from nations that have navigated their own balance of payments crises, is intended to enrich a discourse still largely shaped by Western paradigms.

A political message to financial partners

The timing of this event is far from coincidental. By bringing together critics of austerity just weeks after discussions with the FMI effectively stalled, Ousmane Sonko is signaling his intentions to financial partners. As a central figure in the political shift of 2024, the Prime Minister has made economic sovereignty a cornerstone of his agenda. His direct involvement in the conference elevates its significance beyond that of a mere academic seminar.

For the organizers, the goal is to demonstrate that viable policy space exists beyond conventional programs. This approach aligns with a broader trend across the continent, where several governments are challenging the conditionalities tied to multilateral financing. From Ghana to Zambia, and Ethiopia, recent restructuring experiences have generated a body of knowledge that Dakar intends to leverage. However, unlike these neighbors, Senegal is not formally in default and thus retains, albeit limited, access to regional markets.

Credible alternatives to austerity?

Fundamentally, the alternatives put forward by the economists involved revolve around several key areas. The first focuses on taxation: broadening the tax base, combating illicit financial flows, and renegotiating certain extractive contracts, particularly in the hydrocarbon sector, where production commenced in 2024. The second pertains to the very architecture of the debt, proposing a preference for instruments denominated in local currency or indexed to future revenues. The third highlights regional coordination within the framework of the West African Economic and Monetary Union (UEMOA).

These proposals are not without their complexities. A firm stance against the FMI could potentially increase the risk premium demanded by investors, even as the Senegalese Treasury remains reliant on regular issuances in the public securities market. Furthermore, any renegotiation will inevitably require dialogue with eurobond holders, whose interests diverge from those of bilateral creditors. In practice, the government’s political latitude will depend on its ability to balance a sovereign discourse with clear signals of financial credibility.

Beyond the announcements, the sequence of events unfolding this week in Dakar will be closely monitored by sub-regional capitals and rating agencies. It could herald a new phase of negotiations with lenders, or conversely, prolong a standoff whose budgetary cost escalates each quarter.

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