The International Monetary Fund stated on Tuesday that Senegal maintains full authority to determine how it will handle its debt challenges.
The clarification comes after discussions with the Senegalese government about possible solutions to what the IMF describes as “significant debt vulnerabilities.”
According to the IMF, last week’s policy talks were simply part of its mandate to provide expert advice and analysis, not to impose decisions on any government.
Prime Minister Ousmane Sonko revealed over the weekend that IMF officials had encouraged a debt restructuring plan. However, he insisted that Senegal’s government has rejected that option as a strategy to ease pressure on the country’s finances.
Senegal’s economic difficulties escalated last year after the government uncovered previously undisclosed debts, now estimated to be more than $11 billion. In response, the IMF suspended a $1.8 billion financial support program intended for the country.
Sonko’s comments led to a drop in the value of Senegalese bonds on Monday. By Tuesday, the yield on the country’s 2048 dollar bond continued rising, although shorter-term bond rates began to settle.
To secure IMF financing, countries must present a credible plan to restore financial stability and ensure debt sustainability.
The prime minister announced Senegal’s new economic recovery strategy in August, promising to fund 90 percent of the plan using domestic resources to avoid piling on new debt.
However, analysts warn that dismissing debt restructuring leaves Dakar with fewer tools to address its widening budget deficit and manage a debt load now estimated at 132 percent of the country’s GDP.
