A significant conference addressing Senegal’s debt crisis recently convened in Dakar, organized under the patronage of Prime Minister Ousmane Sonko. Although Sonko himself was unable to attend due to illness, as confirmed by Justice Minister Yacine Fall, the event proceeded with a clear mandate: to broaden perspectives and move beyond conventional approaches to economic challenges.

Ayib Daffé, who chairs the parliamentary group for the ruling Pastef party, underscored the urgency of this shift. The prevailing sentiment at the conference was a rejection of the International Monetary Fund’s (IMF) standard proposal for debt restructuring, which involves renegotiating loan terms when repayment becomes unfeasible. Dakar’s government has expressed its disinclination towards this particular option.

Seeking innovative solutions for unsustainable debt

Economists participating in the conference unanimously asserted that Senegal’s current external debt burden is unsustainable, a position that contrasts with previous official assurances. There is a pressing need to identify viable solutions, as the nation’s financial capacity is insufficient to service its foreign creditors, according to economist Souleymane Bah.

Bah elaborated, stating, “The state’s current revenues are inadequate to cover both principal and interest payments. The usual practice of borrowing more to repay existing debt is no longer a sustainable solution, especially with steadily increasing interest rates. We must explore genuine alternatives.”

This pursuit of alternative solutions formed the core objective of the conference, spearheaded by the Ideas Africa Network think tank. The organization holds the view that the IMF’s proposals do not offer an effective path forward for Senegal.

Ndongo Samba Sylla, an economist and researcher with Ideas Africa Network, criticized the IMF’s methodology: “The IMF’s approach is fundamentally opposed to economic transformation. It’s a purely accounting-driven and pro-creditor stance. The IMF will readily lend money to signal your continued creditworthiness, allowing you to repay creditors, but not to invest in transformative economic development.”

Among the innovative strategies discussed were reforming the monetary system, considering a departure from the Franc CFA, and advocating for the cancellation of a portion of the debt deemed “illegitimate.” This “illegitimate” debt refers to obligations allegedly contracted with a lack of transparency by the previous administration, without proper declaration.

However, a potential contradiction within the new leadership emerged. While experts in Dakar, under Prime Minister Ousmane Sonko’s auspices, were deliberating on strategies independent of the International Monetary Fund, President Bassirou Diomaye Faye was simultaneously in Nairobi, Kenya, engaging in discussions with IMF Director Kristalina Georgieva. As of now, these parallel efforts have not yielded any immediate breakthroughs.