Senegal’s government has committed to settling a staggering 1.9 trillion FCFA in public arrears before the end of the current fiscal year—an amount equivalent to nearly 2.9 billion euros. The announcement, delivered by a senior official from the Ministry of Economy, Finance, and Planning, prioritizes payments owed to small and medium-sized enterprises (PMEs), which have been hardest hit by delayed state payments. While the technical specifics of the repayment plan remain under wraps, the move comes at a time when Dakar faces intense fiscal strain and growing pressure to restore economic stability.
Why 1.9 trillion FCFA in public arrears threatens Senegal’s economic recovery
The staggering figure of 1.9 trillion FCFA represents roughly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA. This debt crisis stems from years of unpaid bills to state suppliers, delayed public contract settlements, and unresolved tax credit claims. Details on how the arrears are split between domestic and foreign creditors—let alone which PMEs qualify for early payments—have not yet been disclosed. What is clear, however, is the deepening strain on Senegal’s entrepreneurial ecosystem, where over 60% of some sectors’ revenue depends on government contracts.
Industry groups, including the National Council of Employers (CNP) and the National Confederation of Employers of Senegal (CNES), have warned that prolonged payment delays have already triggered a wave of insolvencies, layoffs, and a sharp decline in bank lending to suppliers. The crisis has been unfolding for over a year and a half, leaving many businesses on the brink of collapse.
Hidden debt and the credibility gap in Dakar’s fiscal transparency
The arrears crisis cannot be viewed in isolation. In February 2025, Senegal’s Cour des Comptes published a damning report revealing billions in previously unrecorded public liabilities—part of an inheritance from the previous administration. This revelation prompted the International Monetary Fund (IMF) to suspend its ongoing program with Senegal and demand a full audit before considering further financial support. Negotiations for a new IMF arrangement remain underway, with the resolution of domestic arrears now a key performance criterion.
The IMF traditionally treats the clearance of domestic arrears as a structural benchmark, on par with controlling public sector wages or achieving a primary fiscal surplus. Dakar’s repayment plan must therefore be backed by a transparent, verifiable process—whether through direct cash payments, sovereign bond issuances, or tax offsets—to secure international backing and restore investor confidence.
The regional stakes: will Senegal follow Côte d’Ivoire and Benin’s lead?
Senegal is not the first West African nation to tackle this challenge. Côte d’Ivoire executed a phased repayment of approximately 800 billion FCFA in domestic arrears between 2012 and 2015, combining direct payments with the issuance of negotiable public debt instruments on the West African Monetary Union (WAMU) market. Benin adopted a similar approach in 2019 to settle debts with local suppliers. In both cases, restoring trust among PMEs served as a catalyst for private investment growth.
For President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko—who took office in April 2024 on a platform of fiscal transparency and reform—the timing of this operation is critical. Delivering on the promise by year-end would send a powerful signal to the private sector, which has been grappling with a 18-month slump in public contracting and downward revisions to growth forecasts. The stakes are high: failure to act decisively could further erode business confidence and delay Senegal’s economic rebound.
Where will the money come from? The cost of clearing arrears without worsening debt
The question of funding looms large. Senegal has significantly ramped up issuances on the regional public debt market in 2025, with some bonds carrying interest rates above 8%. While these instruments could provide short-term liquidity, they come at a steep cost. The government must now weigh whether to take on additional debt, spread out payments over time, or leverage tax compensation mechanisms. The chosen path will determine whether this arrears cleanup translates into tangible relief for struggling PMEs—or merely postpones an already unsustainable fiscal imbalance.
The road ahead: balancing speed with sustainability
Senegal’s repayment plan faces a delicate balancing act. Speed is essential to prevent further business collapses, but fiscal prudence is non-negotiable. The government’s ability to navigate this dilemma will shape not only the fate of thousands of PMEs but also Dakar’s broader economic trajectory. With international lenders closely monitoring progress, the stakes extend beyond balance sheets—they encompass trust, transparency, and Senegal’s long-term financial credibility.