By Portia Crowe
DAKAR (Reuters) -The International Monetary Fund will not decide before May whether Senegal must repay money disbursed under a now-frozen programme, it said on Thursday, meaning the West African nation will likely miss its goal of having a new programme in place by June.
The IMF’s Senegal mission chief Edward Gemayel told a call for investors on Thursday that discussions on a new bailout programme – which would follow a decision on the waiver – are expected to begin in June or July, according to three people on the call.
The IMF froze its $1.8-billion bailout programme after Senegal’s government, elected last year, revealed that the previous government had misreported economic data and that the country’s debt was higher than previously thought.
Investors had been expecting a decision on a waiver before the end of April. Senegal’s finance minister said in February the country hoped for a new programme by June.
Pushing back the timeline means Senegal will go longer before obtaining key financing and making critical, politically sensitive decisions on spending.
“The authorities are making every effort to secure the waiver,” an IMF spokesperson told Reuters on Thursday, noting that the earliest possible date for the IMF board to consider it would be May.
The IMF board’s decision would be contingent on obtaining the final debt data and reaching an agreement on corrective measures, the spokesperson said.
“Only after these steps will discussions on a new programme commence,” the spokesperson said.
A spokesperson for Senegal’s finance ministry said the situation was “dynamic and constantly evolving.”
“We are currently really focused on preparing for the IMF Spring Meetings, which we will be taking part in, and also on implementing the reforms as we have indicated,” she said, referring to meetings in Washington that start next week.
Senegal’s Court of Auditors said in a report released in February that, at the end of 2023, the country’s total outstanding debt represented 99.67% of gross domestic product, compared with a previously recorded figure of 74.41%.
Gemayel told investors on Thursday that an IMF-led audit had confirmed the domestic debt figures in the Court of Auditors report but found that external debt appeared to be larger than the report indicated, according to two people on the call.
The three people who participated in the call with Gemayel on Thursday, as well as two people familiar with the IMF’s activities in Senegal, told Reuters the IMF was expected to grant Senegal the waiver.
PRESSURE FOR CUTS
Subsequent talks on a new programme for Senegal will encounter several challenges, as Senegal will face pressure to make spending cuts required to bring debt down to levels the IMF considers sustainable.
In February, the government said it would cap fuel subsidies at 2% of GDP, but it has not made clear whether it is willing to raise tariffs to do so.
Gemayel told Reuters in an interview in March that energy subsidy cuts would be an essential part of economic reforms.
Senegal will also be pushed to curb tax exemptions – another politically unpopular move for the country’s populist leaders who were swept to office a year ago on promises to ease citizens’ economic pain.
Senegal faces significant repayment bills this year of roughly 3.85 trillion CFA francs, or around $6.7 billion, according to its budget.
Authorities have been tapping every possible source for cash to pay off the debt, including turning to local markets. The government said last week it had raised 405 billion CFA francs in a regional retail bond sale.
Gemayel also said in March that Senegal had begun re-profiling of domestic debt with banks and was trying to compress some spending.
(Reporting by Portia Crowe in Dakar; Editing by Nia Williams, Robbie Corey-Boulet and Rod Nickel)
