Senegal: Default Today or Default Tomorrow

Emerging market debt has enjoyed a strong year, but Senegal stands out as a stark exception, with its dollar and eurobonds trading just above distressed levels. A wave of newly uncovered liabilities has pushed public sector debt to roughly 132% of GDP at end-2024, and even after rebasing, ratios are expected to remain well above 100%. Political infighting at the highest levels of government is undermining policy cohesion just as the country confronts an urgent need for fiscal consolidation.

While recent oil and gas developments offer growth headlines, they are unlikely to generate enough near-term revenue to meaningfully ease Senegal’s debt burden or expand fiscal space. For investors, secured near-term financing and regional market access may buy time, but without extraordinary adjustment measures, the trajectory still points toward an eventual restructuring or default risk that is difficult to ignore.