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IMF Assessing Impact on Senegal After Audit Finds Sall’s Regime Failed to Report Debt

(Bloomberg) -- The International Monetary Fund is assessing the impact of revisions to Senegalese budget data that showed the West African country’s public debt and fiscal deficit were higher than previously reported.

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“Preliminary findings indicate substantial revisions to budget execution data for the period 2019-2023,” the fund said in a statement following a staff visit. “These revisions are primarily attributed to investments financed through external loans and domestic bank borrowing.”

The result of the changes is that Senegal’s fiscal deficit and public debt during the period “are now estimated to be significantly higher than previously reported in budget and settlement laws,” the IMF said.

Prime Minister Ousmane Sonko announced last month that a review ordered by new President Bassirou Diomaye Faye found the budget deficit at the end of 2023 was more than 10%, almost double the 5.5% previously reported. The ratio of debt to gross domestic product averaged 76.3% during former President Macky Sall’s last five years in power — higher than the 65.9% that had originally been stated, Sonko said.

The findings led Moody’s Ratings to downgrade Senegal’s long-term foreign currency ratings earlier this month to B1, four steps below investment grade. Sall rejected the outcome of the review in an interview with Bloomberg TV on Oct. 14.

“I regret the prime minister’s remarks that are false, totally false and that has led to a downgrade by Moody’s,” Sall said.

Senegal continues to face “a challenging environment” with budget execution showing signs of further strain, the IMF said in Wednesday’s statement. A revenue shortfall reported following an earlier visit continued through end-September, with the fiscal deficit set to exceed the previous estimate of 7.5% of GDP, it said.

“Looking ahead, it is critical for the authorities to implement bold and timely measures to ensure fiscal sustainability and put public debt on a downward trajectory,” the IMF said.