Senegal’s Economy Slows to 2.5% as Debt Talks Begin

Economy · Senegal

Senegal’s economy is slowing sharply in 2026: the government forecasts 2.5% growth after 6.7% in 2025, and a US$2.2 billion IMF programme still awaits approval. It matters to US readers because oil and gas now run at full rate, its Eurobonds trade below 50 cents, and the CFA franc currency is tied to the euro.

The Short Answer: Slower Growth, Heavy Debt

Senegal’s economy is weaker than the headline numbers of 2025 suggest. Growth of 6.7% last year came mainly from the first full year of oil output, according to the IMF. Without oil and gas, the economy grew only 2.2%.

This year the picture is flatter. The Economy Ministry’s April report forecasts 2.5% growth for 2026, and it blames a smaller contribution from hydrocarbons. The national statistics agency, ANSD, said on 1 October 2026 that real GDP rose just 0.1% in the second quarter, after adjusting for seasons.

The bigger story is the balance sheet. Senegal is negotiating a debt treatment with foreign creditors, and the IMF has not yet approved its new programme. Prices are calm, but public finances are not.

Oil and Gas: Running at Full Rate, Growth Still Slows

Senegal became an oil producer in June 2024. The Sangomar field, offshore from Dakar, is run by Woodside Energy with an 82% stake. The state company Petrosen holds 18%.

Woodside said Sangomar averaged 99,000 barrels a day in the second quarter of 2026 on a 100% basis. Woodside’s own share was 86,000 barrels a day, and reliability was 99.3%. Its share of production for the first half was 15.0 million barrels, up from 14.4 million a year earlier.

Woodside is also studying a second phase aimed at the upper S400 reservoirs. It is talking with Petrosen and the government. No investment decision has been announced.

The Greater Tortue Ahmeyim gas project sits on the Senegal and Mauritania border. Its partners lifted 18.5 liquefied natural gas cargoes in the first half of 2026, according to Kosmos Energy, a US partner. Full-year guidance stays at 32 to 36 cargoes. Output is up slightly on last year, so the forecast reflects a smaller oil boost, not a stoppage.

The oil boom has not lifted the rest of the economy. Non-oil growth was 2.2% in 2025, and the Economy Ministry expects about 3% for 2026 excluding hydrocarbons and agriculture. The original budget law assumed 5.5%.

The Debt Audit: How the Hidden Debt Came Out

The shock began with an audit. Senegal’s Court of Auditors reported in February 2025 that central government debt at the end of 2023 was 99.67% of GDP. The previous government had announced a figure of about 74%.

The court also recalculated the 2023 budget deficit at 12.3% of GDP, or XOF 2,291 billion (about US$3.9 billion). The earlier figure was 4.9%. It found bank debt of XOF 2,517 billion (about US$4.3 billion) taken on outside the budget as of 31 March 2024, without parliamentary approval.

The IMF later estimated total public debt at 132% of GDP at the end of 2024, as reported by CNBC Africa and Ecofin. In June 2026 the IMF said the fiscal deficit had fallen from 13.4% of GDP in 2024 to 6.4% in 2025, mostly through spending cuts. It added that fiscal and debt vulnerabilities remain high.

Moody’s measures differently, because it includes some state companies. On that basis it puts public debt near 108% of GDP and says interest now takes 23.7% of state revenue, against 16.1% in 2023.

The IMF Deal and the Debt Treatment

The IMF announced a staff-level agreement on Tuesday 1 September 2026. It could support a 36-month Extended Credit Facility of about US$2.2 billion (SDR 1,537.1 million) for 2026 to 2029. A staff-level agreement is not final approval.

Two conditions come first. Senegal must take corrective actions so the IMF can waive its misreporting of past data, and it must receive financing assurances from partners. The IMF has said no precise date has been set for the Executive Board.

Dakar has said it will seek a debt treatment. Ecofin reports that about US$4.8 billion of Eurobonds across five series fall inside the perimeter, all trading below 50 cents on the dollar or euro. CFA franc debt and seven total return swaps worth about XOF 999 billion (about US$1.7 billion) are outside it.

Senegal invited all external creditors to a video call with the IMF on Tuesday 6 October 2026 at 12:00 GMT. It was meant to set out the reform plan, the timetable and next steps. We have not seen a report of what was said.

Rating agencies expect losses. Moody’s cut Senegal to Caa2 on 28 August with a negative outlook. S&P cut it to CC on 4 September, saying creditors are highly likely to take losses. Ecofin reports that Moody’s projects losses of 10% to 20% for private creditors.

Senegal has kept paying so far. Its debt director said on 4 September that it would honour the coupon due on 13 September on its 2048 Eurobond. We could not confirm from a primary source that holders received it.

Politics adds risk. Moody’s cites the dismissal of former prime minister Ousmane Sonko and his later election as president of the National Assembly. It warns that friction between the executive and parliament could delay fiscal consolidation.

The CFA Franc: Why It Is Part of the Story

The CFA franc is the currency of eight West African countries, including Senegal. It is issued by the regional central bank, the BCEAO, and is fixed at 655.957 francs to one euro. France guarantees unlimited convertibility into euros.

A 2020 reform ended the rule that half the BCEAO’s reserves sit at the French Treasury, and it removed French officials from its governing bodies. The peg and the French guarantee stayed. The planned new currency name, the eco, has not been introduced.

The peg shields Senegal from sharp currency swings. It also means Dakar cannot devalue to ease its debt burden, and it must borrow from regional investors when foreign markets close. Moody’s warns against too much dependence on the regional market.

The BCEAO kept its main rate at 3.00% on 9 September 2026. It expects union-wide inflation of 1.0% for 2026, and it said growth in the union was 6.0% in the second quarter. This article converts francs at about 585 per US$1, which is the euro rate of 5 October 2026 from EODHD (1.1217) divided into the fixed peg.

Prices: Calm Year on Year, Jumpy in the Month

Consumer prices rose 1.2% in August 2026 from a year earlier, according to ANSD. The monthly rise was 2.0%, driven by food (up 3.9%) after fuel prices rose 5.0%. Underlying inflation, which excludes fresh food and energy, was 1.2%.

The IMF warns that higher oil prices since the start of the war in the Middle East will pressure public finances this year through untargeted subsidies. The September inflation reading from the statistics agency ANSD is the next hard data point.

What It Means for You

If you hold Senegal’s dollar or euro Eurobonds, expect a restructuring rather than a clean default. Prices near 50 cents already reflect losses, and the terms and the voting process have not been published. Check how much of your fund sits in Senegal before the next headline.

If you follow energy stocks, Sangomar and Tortue show steady output, but debt service is rising at the same time. Woodside and Kosmos both report on Senegal each quarter. For travel and migration, Senegal has been on the US partial entry restriction list since 1 January 2026, which suspends several visa types for Senegalese nationals. Most people already holding a valid visa are not affected.

Read more in our Senegal hub, our report on Dakar’s push for a fast debt restructuring, our look at the IMF deal and the CFA debt and our note on Senegal’s fall in foreign investment.

What Is Not Known

We do not know when the IMF Executive Board will vote, or whether Senegal will meet the conditions on time. We do not know what creditors said on the 6 October call, or how the vote across the five Eurobond series will work.

We could not confirm that holders received the 13 September coupon. We could not find a verified figure for the state’s oil revenue this year. Nor did we find an official sector breakdown of second-quarter GDP.

More: Senegal news in English, every day from The Rio Times.

Sources

• IMF press release 26/282, staff-level agreement with Senegal, 1 September 2026
• IMF press release 26/216, staff visit to Senegal, 22 June 2026
• ANSD, GDP, second quarter 2026, and consumer prices, August 2026
• Senegal Economy Ministry, growth outlook, 8 April 2026
• Court of Auditors, audit of public finances 2019 to March 2024, February 2025
• Financial Afrik, Moody’s downgrade of Senegal
• Financial Afrik, BCEAO rate decision, 9 September 2026
• Ecofin Agency, Senegal debt restructuring terms
• Seneweb, IMF on Senegal debt and creditors
• Woodside Energy, second quarter report, 30 June 2026
• Kosmos Energy, second quarter 2026 results
• NAFSA, US proclamation of 16 December 2025 on entry restrictions
• CNBC Africa, Senegal’s hidden debt crisis
• RT, euro and CFA franc rate, 5 October 2026 (EODHD)

Frequently Asked Questions

How is Senegal’s economy doing in 2026?

Growth is slowing. The Economy Ministry forecasts 2.5% for 2026 after 6.7% in 2025, and ANSD reported GDP up only 0.1% in the second quarter. Inflation was 1.2% in August, but public debt is very high.

Is Senegal in default?

Not yet. Senegal says it will seek a debt treatment for its Eurobonds, but it said on 4 September that it would honour the 13 September coupon on its 2048 Eurobond. S&P rates it CC and Moody’s Caa2.

What is the IMF deal with Senegal?

The IMF and Senegal reached a staff-level agreement on 1 September 2026 on a 36-month programme of about US$2.2 billion. It still needs approval from the IMF Executive Board, and no date has been set.

How much oil does Senegal produce?

The Sangomar field averaged 99,000 barrels a day in the second quarter of 2026 on a 100% basis, according to Woodside. Senegal’s first oil came in June 2024.

What is the CFA franc and why does it matter?

The CFA franc is the common currency of eight West African countries, including Senegal. It is fixed at 655.957 to the euro and guaranteed by France, so Senegal cannot devalue to ease its debts.

What is Senegal’s inflation rate?

Consumer prices rose 1.2% year on year in August 2026, according to ANSD. They rose 2.0% in the month, mainly on food, fuel and air fares.

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