Due to the increase in the budget deficit and public debt between 2019 and 2023, the Moody's rating agency lowered Senegal's rating. In response to this review, the Senegalese government has reaffirmed its determination to implement a set of ambitious reforms. The main objective of these reforms is to significantly reduce the budget deficit by 2025, in line with the international commitments made within UEMOA and ECOWAS

According to the agency's explanations, the short-term issuer ratings have been confirmed to Not Prime (Np). At the same time, we put long-term ratings under surveillance in order to downgrade. Previously, the outlook was stable.

“The downgrade is due to a fiscal and debt situation that is significantly lower than what we had previously assessed. The preliminary findings of the Ministry of Finance's audit indicate significantly higher previous government budget deficits and a significantly higher debt burden than previously published, although the exact magnitude remains unclear pending validation by the Senegal Court of Auditors,” explains Moody's. The high debt burden of Senegal,” explains Moody's. Senegal's high debt burden, added the rating agency, estimated by preliminary findings at 83.7% of GDP in 2023 at the central government level - about 10 percentage points higher than the previously published ratio - reduces shock absorption capacity and increases sensitivity to higher financing costs

“The review aims to assess the impact of recent findings on the sovereign debt amortization profile and related government liquidity risks. We will seek to better understand the size and composition of public debt, and associated risks. In addition, we will focus on government capacity. to meet future financing needs, in particular if debt refinancing needs prove to be higher than currently expected, and on the relationship with IMF in the future. The review period will also provide an opportunity to assess the institutional response and the ability of policy makers to timely reverse the erosion of fiscal solidity,” the document reads

Moody's points out that Senegal's local currency and foreign currency ceilings have been lowered to Baa3 and Ba1 respectively. The local currency ceiling is four notches above the sovereign rating to take into account the government's moderate footprint in the economy, the relative solidity of the institutional framework, as well as the mitigating impact of Senegal's membership in the West African Economic and Monetary Union (UEMOA