Ndongo Samba Sylla: Sénégal Dette Restructuration Deux Vitesses, Asymétrie Dévoilée

• Economist Ndongo Samba Sylla criticizes Senegal's debt management following a $2.2 billion IMF agreement, noting a shift from 'sustainable debt' to 'debt treatment.'
• Sylla highlights a projected surge in 'hidden debt' in CFA francs from UEMOA banks, which is reportedly excluded from the restructuring process.
• He points out an unjustifiable asymmetry, where eurobond holders may face haircuts despite no link to hidden debt, while multilateral creditors refuse participation due to 'privileged' status.
• Sylla advocates for a citizen debt audit to determine the legality of commitments and warns that IMF-supervised restructuring won't solve Senegal's structural foreign exchange shortage.
• He proposes payment system reform to generate significant revenue without new taxes, drawing lessons from past debt cancellations in Zambia and Ghana.

This creates a "Ndongo Samba Sylla Sénégal dette restructuration deux vitesses" scenario, where some creditors are shielded while others are expected to absorb losses.

Following the announcement of a technical agreement between Senegal and the International Monetary Fund (IMF) for a $2.2 billion package over three years, economist Ndongo Samba Sylla has offered a sharp critique of the nation's ongoing debt management process. Sylla, who serves as research director for Africa at International Development Economics Associates (IDEAs), highlighted a significant shift in the government's narrative. Previously, authorities maintained that Senegal's debt, which they estimated to exceed 130% of its GDP, was sustainable. However, the discourse has now transitioned to discussing a mere "debt treatment" rather than a full "restructuring," a term Sylla suggests the government avoids to sidestep acknowledging past misjudgments.

Sylla's analysis, drawing on data compiled by researcher Modou Ndiaye, points to a concerning rise in undeclared debt denominated in CFA francs. This "dette cachée Sénégal UEMOA" is projected to surge from approximately 12.6 billion CFA francs to nearly 2,390 billion CFA francs between 2024 and 2026. The bulk of this hidden debt originates from banks within the West African Economic and Monetary Union (UEMOA). Crucially, these substantial UEMOA bank claims are reportedly excluded from the scope of the proposed restructuring, creating a significant imbalance in the approach to Senegal's financial obligations.

The economist's primary concern revolves around what he terms an "asymétrie difficilement justifiable" – an unjustifiable asymmetry in how different creditor classes are being treated. While the substantial debts owed to UEMOA banks are set to remain outside the restructuring framework, holders of Senegal's eurobonds, whose outstanding amounts have not shown suspicious fluctuations, may be asked to accept significant haircuts or "décotes." This potential burden on eurobond investors is particularly contentious, as Sylla argues they bear no responsibility for the creation of the hidden debt.

Further exacerbating this "restructuration dette asymétrique Sénégal" is the stance of multilateral creditors, including the IMF, World Bank, and African Development Bank (AfDB). These institutions, which collectively account for nearly 29% of Senegal's external debt stock by the end of 2024, have declined to participate in any restructuring efforts. They cite their status as "créanciers privilégiés," effectively exempting themselves from contributing to the debt relief process. This creates a "Ndongo Samba Sylla Sénégal dette restructuration deux vitesses" scenario, where some creditors are shielded while others are expected to absorb losses.

Ndongo Samba Sylla, who previously co-signed a collective appeal for an "audit citoyen dette Sénégal," insists that no meaningful restructuring can occur until the precise nature—including the legality—of these financial commitments is thoroughly established. He also recalls a January 2019 IMF report that already assessed Senegal's consolidated public debt at 121% of GDP, noting that the institution did not impose significant consequences at that time. This historical context underscores his skepticism regarding the current approach.

Sylla draws parallels with the experiences of Zambia and Ghana, where debt cancellations failed to prevent subsequent defaults a decade later. He contends that a restructuring supervised by the IMF will not resolve Senegal's fundamental challenge: a structural shortage of foreign currency. Instead, he advocates for a comprehensive reform of the payment system, which he believes could generate between 4,000 and 4,500 billion CFA francs without the need for new taxation, offering a more sustainable path to financial stability for Sénégal.

Lawyers advising creditors or investors in Senegalese sovereign debt should closely monitor the ongoing debt restructuring process, particularly the potential for asymmetric treatment of different creditor classes and the implications of 'hidden debt.' This critique highlights significant legal and financial risks, necessitating due diligence on debt transparency and potential challenges to future debt obligations or enforcement.

Source: Original reporting via SenePlus