RATINGS agency Moody’s downgraded Senegal’s long-term credit rating from Ba3 to B1 on Friday, citing a significantly weaker fiscal and debt position than previously expected. The downgrade comes as Senegal faces increasing economic uncertainty due to its rising budget deficit and debt levels.
Senegal is currently in discussions with the International Monetary Fund (IMF) to establish corrective measures after an audit ordered by the newly elected President, Bassirou Diomaye Faye, revealed a budget deficit for 2023 exceeding 10 percent. This is in stark contrast to the 5 percent figure reported by the previous administration.
As a consequence of the findings, Faye’s government decided not to proceed with the country’s request for an IMF disbursement initially planned for July, following a review by the IMF in June.
Moody’s report indicated that the process of fiscal consolidation is likely to be lengthy, despite expectations of a significant economic growth boost in 2025. The ratings agency has also placed Senegal’s long-term ratings ‘on review’ for a possible further downgrade.
Senegal now faces challenges in stabilising its economy as it works to address the substantial fiscal gap. The downgrade could increase borrowing costs for the country, further complicating efforts to achieve economic stability under the new government.
