LONDON, Oct 21 – Senegal’s international bonds fell sharply on Tuesday after National Assembly President Ousmane Sonko said lawmakers would not support key budget legislation, raising concerns over the government’s ability to advance its debt restructuring strategy and secure support for its fiscal programme.
All of Senegal’s euro- and dollar-denominated bond maturities fell by more than one cent on the day, with longer-dated securities recording the steepest losses. The 2037 bond declined 2.166 cents to a bid price of 48.931 cents on the euro, according to Tradeweb data.
Sonko remains a central figure in Senegalese politics despite being dismissed as prime minister by President Bassirou Diomaye Faye in May. He leads the ruling PASTEF party, which holds 130 of the National Assembly’s 165 seats, and was elected speaker with the backing of 132 lawmakers, giving him substantial influence over the government’s legislative agenda.
The parliamentary dispute creates an additional challenge for Senegal’s efforts to restructure its debt. Without approval of the revised budget, the government risks delaying an International Monetary Fund programme that underpins its broader debt restructuring strategy.
Speaking at a news conference on Monday, Sonko criticised the government’s decision to pursue debt treatment under the G20 Common Framework. He argued that Senegal was facing a cash-flow problem rather than requiring a reduction in its overall debt burden.
Budget Dispute Raises Fiscal Uncertainty
Sonko also warned that lawmakers would not vote for the revised 2026 finance bill or the proposed 2027 budget, both of which are due for parliamentary consideration. The threat was intended to oppose the government’s plans to reduce fuel subsidies.
The revised 2026 budget outlines a weaker economic and fiscal outlook than the original projections. Real gross domestic product growth is now forecast at 2.7%, down from approximately 5% in the initial budget, while the fiscal deficit is projected to widen to 7.6% of GDP from 5.4%.
The deterioration is largely attributed to a sharp increase in energy subsidies. Spending on the subsidies is projected to triple to 790.3 billion CFA francs ($1.36 billion), compared with 250 billion CFA francs previously.
The government’s proposed 2027 budget sets out plans to reform energy subsidies by directing assistance towards the most vulnerable populations. The stated objective is to bring the annual cost of energy subsidies to no more than 1% of GDP by 2029. The draft bill does not provide a specific subsidy expenditure figure for the next year.
The dispute places the government’s fiscal adjustment plans at the centre of a political disagreement, with potential implications for budget approval, subsidy reform and the timing of external financial support.
Debt Burden and IMF Programme
Senegal’s total public debt stood at 105.3% of GDP at the end of 2025, according to government authorities. A debt audit conducted last year found that public debt, including liabilities associated with state-owned enterprises, had reached approximately 112% of GDP at the end of 2024.
That figure was nearly double the previously reported level of around 73%, highlighting the scale of Senegal’s fiscal challenges and the uncertainty surrounding its debt position.
In early September, the government reached a staff-level agreement with the IMF for a $2.2 billion, 36-month Extended Credit Facility to support its reform programme.
The proposed financing is central to the government’s efforts to stabilise public finances and advance its debt strategy. However, the parliamentary standoff introduces uncertainty over the approval of the revised budget and the pace at which the agreed reforms can proceed.
For bondholders, the immediate concern is whether the government can secure sufficient legislative backing to implement its fiscal plans while maintaining progress towards IMF-supported reforms and debt restructuring.
