On Friday, Senegal’s Prime Minister Ousmane Sonko presented a sweeping new economic recovery plan aimed at rebuilding the country’s finances without relying on external debt. The plan, which spans from 2025 to 2028, is expected to be funded 90% by domestic resources, totaling more than 4.6 trillion CFA francs (approximately $8.16 billion). This marks a significant shift as Senegal faces pressure from international institutions due to hidden debts left by the previous administration.
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The initiative seeks to drastically cut Senegal’s budget deficit from 12% of GDP in 2024 to 3% by 2027. This will be achieved by merging and downsizing government institutions, eliminating inefficient tax exemptions especially in the digital space and increasing revenue through higher taxes and new fees. For example, taxes on tobacco will rise from 70% to 100%, and new visa fees will be imposed on visitors from countries that require visas for Senegalese citizens, expected to generate 60 billion CFA francs.
Additional revenues are projected from renegotiating oil, gas, and mining contracts (estimated at 884 billion CFA francs) and renewing telecom licenses (an extra 200 billion CFA francs). The government will also encourage local investment by improving land title access and allowing older vehicles to be imported a move welcomed by the Senegalese diaspora.
A key component of the recovery plan is a focus on cutting public spending and ensuring that government subsidies are more effectively targeted. Prime Minister Sonko announced plans to restructure state institutions, which could save approximately 50 billion CFA francs. The government also plans to boost revenues by removing tax exemptions in under-taxed areas like mobile money and online gaming.
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Foreign currency borrowing will now be strictly directed toward high-return sectors such as oil, gas, and mining. The rest of Senegal’s borrowing needs will be addressed through domestic markets, with an emphasis on transactions in local currency to reduce reliance on foreign debt.
The reforms respond to long-standing calls from the International Monetary Fund (IMF) for more efficient fiscal management. In particular, the IMF has criticized Senegal’s energy subsidies, which it estimates cost the country up to 4% of GDP annually. These subsidies, the IMF argues, benefit wealthier households more than the vulnerable groups they are intended to support.
Edward Gemayel, IMF mission chief to Senegal, stressed that such subsidies should be phased out and replaced with direct financial assistance to low-income households. According to him, transparency and clear communication with the public will be essential for the success of these reforms.
Sonko emphasized that the recovery plan will allow the government to better direct social spending and subsidies, making sure support reaches those who need it most. Additionally, Senegal will look to “recycle” existing state assets with the help of external partners, another measure intended to raise funds without increasing debt.
Overall, the plan marks a significant policy shift toward economic sovereignty and fiscal discipline as Senegal seeks to stabilize its economy in the wake of recent oil and gas production and past financial mismanagement.
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