DAKAR, Sept 23 – Senegal’s fiscal deficit could widen to 9.2% of GDP on a cash basis this year, according to Barclays Plc, as higher debt-service costs, energy subsidies and arrears payments put additional pressure on government finances.
Barclays analyst Michael Kafe estimates the deficit at 7.8% of GDP on a commitment basis, rising to 9.2% after incorporating about 300 billion CFA francs ($525 million) in arrears clearance. Senegal’s supplementary budget places the revised commitment-basis deficit at 7.6% of GDP.
The widening gap reflects growing pressure on government finances as borrowing costs rise and energy subsidies increase. Senegal’s revised budget has already raised the projected fiscal deficit from 5.4% of GDP in the initial 2026 budget to 7.6%.
Debt service squeezes investment
Barclays expects Senegal’s debt-service bill to reach 6.8 trillion CFA francs this year, equivalent to around 30% of GDP and approximately 700 billion CFA francs above the government’s initial projection.
The higher debt burden is limiting room for public investment. Planned capital expenditure has been reduced to 2.3 trillion CFA francs from 2.8 trillion, while Barclays expects actual investment spending to come in closer to 2 trillion CFA francs.
Revenue expectations have also weakened. A flagship government revenue-collection programme has been scaled back to 312 billion CFA francs from an initial 763 billion, with Barclays estimating that it will ultimately generate around 300 billion CFA francs.
Senegal’s official supplementary budget similarly points to weaker revenue and higher expenditure, with total revenues revised down by 340.1 billion CFA francs while spending increases by 150 billion.
Debt restructuring talks ahead
The fiscal pressure comes as Senegal prepares to begin discussions on restructuring its debt under the G20 Common Framework. The country is also moving toward a new three-year, $2.2 billion IMF-supported programme, following agreement between the government and IMF staff earlier this month. The programme is intended to help restore fiscal balance, improve the country’s debt profile and rebuild financing capacity.
Senegal is simultaneously working to address billions of dollars in previously undisclosed borrowing accumulated under the previous administration. The combination of elevated debt-service costs, tighter liquidity and the need to resolve those obligations will make the terms and scope of any future debt treatment important for the country’s financing outlook.
As debt discussions begin, Barclays expects investors to focus on whether the IMF and Senegalese authorities can establish a debt-treatment framework capable of materially improving debt sustainability while easing near-term liquidity pressures.
