Sénégal: Dette Non Déclarée Nullité Parlementaire Débat Sur Accord FMI

• Senegal recently secured a new agreement with the International Monetary Fund after two years of negotiations.
• The government opted for a "treatment plan" over "restructuring" to avoid past associations, despite parliamentary rules requiring authorization for debt conversion.
• Expert Mor Thiam warns that locally contracted loans lacking parliamentary approval could be declared null, though he advises against this in favor of restitution.
• Thiam also highlights potential criminal liability for officials involved in undeclared debt, citing a 114 billion CFA franc sukuk loan that was not transferred to the Treasury.
• To prevent future issues, Thiam advocates for stronger parliamentary oversight and an independent budgetary institution in Senegal.

Significantly, Thiam suggests that only locally contracted loans entered into without the requisite parliamentary authorization could potentially be declared null and void.

Senegal has successfully concluded two years of intense negotiations, securing a new agreement with the International Monetary Fund (FMI). This development comes as the nation grapples with significant economic challenges. According to Mor Thiam, an associate researcher at the National Institute of Public Service and a public finance doctoral candidate at the University of Poitiers, an FMI program was a necessary step for the West African nation. However, the precise nature of addressing the country's financial obligations, particularly the concept of a formal debt `restructuration dette Sénégal`, sparked considerable debate among economists.

Authorities in Dakar opted for the term "plan de traitement" (treatment plan) rather than "restructuration," a deliberate linguistic choice highlighted by Thiam. This decision helps distance the current approach from the often-controversial structural adjustment programs of previous decades. The National Assembly's budgetary rules mandate parliamentary approval for any debt conversion operations, and the legislative body has shown reluctance towards a full restructuring. A key immediate outcome of the new `Accord Sénégal FMI`, as reported by Finance Minister Cheikh Diba, is that the Senegalese Treasury will now be able to settle outstanding payments owed to the private sector.

This ability to clear arrears is deemed critical by Thiam for revitalizing an economy that has seen public and foreign direct investments diminish over the past two years. However, the researcher also cautions that the agreement may bring socially challenging consequences. He points to the announced review of eligibility criteria for energy subsidies, an issue that previously caused social unrest in Zambia during a comparable FMI engagement. Dakar's primary objective will be to restore its fiscal flexibility without further eroding the purchasing power of its citizens, especially amidst ongoing public discontent regarding electricity costs.

A critical area of concern for Senegal's financial stability involves `Sénégal dette non déclarée nullité parlementaire`. Mor Thiam prefers the term "undeclared loans" over "hidden debt" to describe these obligations, categorizing them into four distinct legal types: loan guarantees, payment arrears, the unconsolidated debt of `dette parapublique Sénégal` (parapublic companies), and direct loans. Significantly, Thiam suggests that only locally contracted loans entered into without the requisite parliamentary authorization could potentially be declared null and void.

Despite this legal possibility, Thiam advises against outright nullification, explaining that such an action would compel the state to immediately repay any sums already received. Instead, he proposes a restitution process, drawing a parallel to the precedent set by Greece in similar circumstances. The issue of accountability for these undeclared financial commitments is also pressing. Thiam raises the specter of criminal prosecutions for "gestion de fait" (de facto management) and "détournement de deniers publics" (misappropriation of public funds), offenses severely penalized under Senegalese law.

He cites a specific instance of a 114 billion CFA franc sukuk loan that was reportedly never transferred to the Treasury. Thiam believes that the chain of criminal responsibility could extend to the highest echelons of the state. Conversely, he views attempts to hold international creditors legally accountable in international jurisdictions as largely impractical. This underscores the domestic focus of potential legal actions related to `Mor Thiam dette publique` and the need for robust internal controls.

To prevent a recurrence of undeclared debt issues and ensure greater transparency, Mor Thiam advocates for two key reforms. Firstly, he calls for significantly strengthened `Sénégal contrôle parlementaire dette` over public finances. This would ensure that all borrowing activities, particularly those that might fall under the umbrella of `Sénégal dette non déclarée nullité parlementaire`, receive proper legislative scrutiny and authorization.

Secondly, Thiam proposes the establishment of an independent budgetary institution. This body, inspired by France's High Council of Public Finance but adapted to Senegal's unique context, would provide an additional layer of oversight and expertise in managing the nation's financial health. Such an institution could play a crucial role in monitoring the implementation of the `Plan traitement dette Sénégal` and ensuring adherence to fiscal discipline.

Furthermore, Thiam outlined three essential conditions for Senegal to effectively navigate negotiations within the G20 Common Framework, an initiative launched in 2020 to facilitate `restructuration dette Sénégal` for low-income countries. These conditions include avoiding delays, especially after a 22-month period without an FMI program; securing comparable treatment across its diverse and often fragmented creditor base; and implementing safeguards against punitive contractual clauses, such as those that could have resulted in a nearly two billion budget overrun for Zambia following economic growth.

Lawyers and compliance officers should scrutinize Senegalese debt instruments for proper parliamentary authorization, as locally contracted loans without it may be nullified. They must also be aware of potential criminal liability for officials involved in undeclared debt and the legal implications of terminology used in debt negotiations.

Source: Original reporting via SenePlus.