S&P downgrades Senegal’s local-currency rating further into junk territory due to refinancing pressures
Credit ratings agency S&P on Friday downgraded Senegal’s local currency rating to “CCC+/C” from “B-/B,” highlighting increasing refinancing risks and the government’s escalating reliance on short-maturity domestic debt as discussions on a new IMF program remain stalled.
S&P projects Senegal’s gross financing needs to reach approximately 26% of GDP in 2026. As IMF funding remains frozen and access to international markets is restricted following the revelation of previously unreported debts in September 2024, the government has increasingly sought support from the regional debt market.
The change has increased rollover risks, as regional borrowing generally involves shorter maturities and elevated costs, which could further strain Senegal’s fiscal situation and complicate efforts to manage the newly revealed debts and rising interest expenses.
Senegal is currently facing economic challenges following the revelation of concealed liabilities, now estimated at $13 billion, attributed to the previous administration. S&P stated, “The 2026 budget, which aims for ambitious fiscal consolidation, will be challenging to implement, as spillovers from the Middle East conflict increase public expenditure, including interest costs, which we estimate to be around 25% of government revenue.”
Senegal has fulfilled nearly half-a-billion-dollar debt payments that were due earlier this month; however, sources indicate that it has postponed payments to other lenders and is confronted with difficult decisions regarding spending cuts that may intensify emerging civil unrest, particularly as the government struggles to balance its budget amidst rising public expenditure and the need for fiscal consolidation.
The agency has revised Senegal’s credit outlook to “negative,” changing it from “CreditWatch developing.”
All three major ratings agencies currently categorize Senegal’s sovereign credit as highly speculative, often referred to as “junk.” S&P’s most recent downgrade moves the West African nation deeper into speculative territory, approaching levels that indicate a heightened risk of default.
