Senegal’s government has pledged to settle an estimated 1.9 trillion FCFA (about $2.9 billion) in accumulated public arrears before the end of the fiscal year, a move that places small and medium-sized enterprises (SMEs) at the front of the payment queue. Announced by a senior official under the Ministry of Economy, Finance, and Planning, the initiative arrives at a moment of severe budgetary strain for Dakar, raising immediate questions about funding sources, eligibility criteria, and the long-term viability of the operation.
Unpaid bills pile up: what 1.9 trillion fcfa in arrears reveals about Senegal’s fiscal health
The staggering figure—equal to roughly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA—highlights years of unpaid invoices to suppliers of the state, delayed public contract settlements, and unresolved tax credits. Details remain scarce: authorities have not disclosed how these arrears are split between domestic and foreign creditors, nor have they clarified how many businesses will benefit in the first wave or what standards will determine priority payments.
This lack of transparency is fuelling concerns among business leaders. Industry associations, including the National Council of Employers (CNP) and the National Confederation of Senegalese Employers (CNES), warned in early 2024 that over 60% of revenues in key sectors—construction, IT services, and administrative supplies—depend on public contracts. Since mid-2023, documented cases of supplier bankruptcies, layoffs, and tightened bank lending to state vendors have mounted, underscoring the human and economic toll of delayed payments.
Hidden debt revelations and the IMF’s scrutiny
The arrears crisis cannot be separated from a February 2025 report by Senegal’s Audit Court, which revised upward the country’s inherited public debt by several hundred billion FCFA after identifying unreported commitments from the previous administration. The findings prompted the International Monetary Fund (IMF) to suspend its ongoing program and demand a full audit before releasing additional funds. Negotiations for a new IMF arrangement remain ongoing, with the resolution of domestic arrears now seen as a structural benchmark similar in importance to wage bill control or primary surplus targets.
For Dakar, the clearance plan must prove credible to unlock further financial support. Analysts expect any credible schedule to combine direct cash payments from treasury resources, potential securitization through sovereign bonds, and tax offsets—each carefully calibrated to avoid worsening an already fragile fiscal balance.
Regional benchmarks: lessons from Ivory Coast and Benin
Senegal is not the first West African nation to tackle this challenge. Between 2012 and 2015, Ivory Coast progressively cleared around 800 billion FCFA in domestic arrears by blending direct payments with the issuance of negotiable public securities on the West African Monetary Union (WAMU) market. Benin adopted a similar model in 2019 to settle obligations to local vendors. In both cases, restored confidence among SMEs preceded a rebound in private investment.
For Senegal’s President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko—who took office in April 2024 on a platform of budgetary transparency and systemic change—the clearance initiative is as much a financial test as a political one. Meeting the year-end deadline could send a strong signal to the domestic private sector, which has endured eighteen months of shrinking public procurement and downgraded growth forecasts.
Funding the cleanup: tough choices ahead
Raising the necessary resources poses a major challenge. Senegal’s regional bond market, where Treasury issuances in 2025 have periodically climbed above 8% yields, offers a costly channel. Authorities must weigh the risks of taking on new debt, spreading payments over time, or offering tax relief—each option carrying different implications for both creditor SMEs and the country’s overall debt trajectory.
The coming months will reveal whether the announced arrears settlement translates into tangible relief for cash-strapped suppliers or simply postpones an already unbalanced fiscal equation.