The government of Senegal has officially launched the clearance of public arrears totaling 1.9 trillion FCFA — equivalent to roughly 2.9 billion euros — before the end of the current fiscal year. The announcement, confirmed by a delegate minister at the Ministry of Economy, Finance, and Planning, prioritizes payments to small and medium-sized enterprises (SMEs) as primary creditors. While technical details are still being finalized, the initiative arrives amid a tight budgetary environment in Dakar.
Public arrears expose deep fiscal strain
The 1.9 trillion FCFA figure represents about 10% of Senegal’s estimated GDP of 19 trillion FCFA in 2024. This amount reflects years of unpaid invoices to state suppliers, delayed public contract settlements, and unresolved tax refunds. Specific breakdowns — including the share of domestic versus external debt, the number of affected SMEs, or eligibility criteria for early payments — have not yet been disclosed. This lack of transparency has fueled uncertainty across sectors.
Leading business organizations, including the Senegalese Employers’ Council (CNP) and the National Confederation of Senegalese Employers (CNES), raised alarms as early as 2024 about the vulnerability of small businesses reliant on public contracts. In sectors such as construction, IT services, and administrative supplies, over 60% of revenue stems from state orders. Since mid-2023, documented cases of supplier insolvencies, mass layoffs, and reduced access to bank credit have surged.
Accounting gaps and hidden debt complicate recovery
The issue of public arrears cannot be separated from a February 2025 report by Senegal’s Audit Court, which revised upward the country’s inherited public debt. The report identified several hundred billion FCFA in previously unrecorded liabilities, prompting the International Monetary Fund (IMF) to pause its ongoing program and demand a comprehensive audit before resuming funding. Negotiations for a new IMF arrangement remain ongoing.
For the IMF, clearing domestic arrears is a key structural reform indicator, alongside managing public sector wages and the primary fiscal balance. A transparent clearance plan — with verifiable, cash-backed payments, potential treasury bill issuance, or tax compensation mechanisms — is central to unlocking a new Extended Credit Facility agreement.
Regional lessons and political stakes
Senegal is not alone in addressing this challenge. Côte d’Ivoire cleared roughly 800 billion FCFA in domestic arrears between 2012 and 2015 using a mix of direct payments and tradable public securities on the West African Monetary Union (WAEMU) market. Benin followed a similar approach in 2019 for local suppliers. In both cases, restored confidence among SMEs preceded a rise in private investment.
For President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko, who took office in April 2024 on a platform of transparency and fiscal reform, delivering on the arrears clearance by year-end is both a financial and political imperative. Meeting this deadline would send a strong signal to the private sector after eighteen months of declining public orders and revised growth forecasts.
Yet the source of funding remains uncertain. Senegal’s increase in public bond issuances in 2025 — some at rates exceeding 8% — offers a costly option. The government must now decide between additional borrowing, staggered payments, or fiscal compensation. The chosen path will determine whether this clearance brings real relief to SME creditors or simply postpones a structural budget imbalance.
What’s next for businesses and investors?
The clearance timeline, eligibility rules, and payment methods will shape business recovery in the coming months. While the government promises transparency, SMEs across Senegal remain cautious — hopeful for immediate liquidity, but wary of another cycle of delayed promises and unmet expectations.
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