Senegal Rejects Allegations of Hidden €650M Borrowing

Senegal has firmly denied allegations that it secretly borrowed €650 million to avert a potential default, maintaining that all transactions were conducted in line with market transparency rules.

The government was responding to claims that it secured funding through agreements with the Africa Finance Corporation and First Abu Dhabi Bank, reportedly offering preferential repayment terms over existing bondholders.

In an official statement, the finance ministry said the transactions form part of a broader strategy to diversify funding sources and manage rising fiscal pressures, including refinancing debt and covering state expenditures.

Officials noted that the financing—structured through domestic sovereign bonds and instruments such as total return swaps—provided more favorable terms than those available on international markets, with interest rates around 7.1%.

Authorities also rejected any suggestion of secrecy, insisting the agreements were fully compliant with transparency standards.

The issue comes as Senegal faces mounting economic challenges, with a budget deficit approaching 14% of GDP and public debt estimated at 132% of national output. Despite these pressures, the country recently repaid $471 million in external debt, easing immediate default concerns.

The current administration has blamed former president Macky Sall’s government for concealing the true extent of fiscal imbalances—claims partially supported by findings from the International Monetary Fund, which has since suspended a $1.8 billion aid programme pending further clarity.

The situation underscores the growing strain on Senegal’s public finances, as authorities seek to balance debt sustainability with maintaining investor confidence.

Source: Newstimehub