S&P downgrades Senegal rating after IMF bailout announced

The S&P agency on Friday downgraded Senegal’s sovereign credit rating to “CC” and said its outlook for the debt-stricken nation was negative.

S&P cited a “debt restructuring” plan that is part of an agreement announced this week with the International Monetary Fund for an $2.2 billion loan to Senegal.

“In our view, this implies that the ongoing debt renegotiation will result in foreign currency creditors receiving less than originally promised, whether through a reduction in principal, interest, or payment terms,” the agency said in a statement.

“Consequently, we consider a distressed exchange or default on Senegal’s foreign currency commercial debt to be extremely likely.”

The IMF deal was announced on Tuesday, but the bailout is still subject to certain conditions before the Fund’s executive board approves it.

It came after an earlier IMF program was suspended following the discovery of previously unreported Senegalese debt.

Mercedes Vera Martin, division chief at the IMF African Department, told AFP in an interview Tuesday that “since the misreporting was identified, the authorities have taken efforts to improve the transparency.”

With a total public-sector debt estimated at 132 percent of GDP at the end of 2024, Senegal is one of the most indebted countries in sub-Saharan Africa.

However, its overall fiscal deficit narrowed sharply from 13.4 percent of GDP in 2024 to 6.4 percent of GDP in 2025, mostly driven by spending rationalization, the IMF said in June.

The question of debt restructuring is a politically incendiary one in Senegal, with former prime minister and current parliamentary speaker Ousmane Sonko calling any such move a “disgrace” for the country.

Finance Minister Cheikh Diba has referred to planned changes regarding Senegal’s debt as a “treatment plan,” avoiding use of the word “restructuring.”

Still, S&P said that it viewed any debt renegotiation as likely to hurt the country’s creditors.

It said it believed there was a possibility that Senegal’s sizeable local currency debt could also be part of the restructuring plan, prompting it to also lower its long-term local currency rating for the country to “CCC.”

“The negative outlook reflects the risks that local currency debt could be drawn into the restructuring process, because some creditors may challenge the proposed restructuring perimeter,” the agency said in its statement.

Moody’s rating agency last week cut Senegal’s long-term foreign-currency debt rating to Caa2 from Caa1, while negotiations between Dakar and the IMF were ongoing.