Senegal’s Public Debt at 99.7% of GDP: Alarm Bell Pressed to Cut Wasteful Expenditure

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The Court of Auditors’ report highlights unaccounted debts, opaque spending, and irregular budget transfers. These practices have inflated the debt and worsened the deficit. Senegalese economist Ousmane Dieng explains that the cash-based accounting system is outdated and that switching to accrual accounting could have prevented these adjustments.

Senegal is facing a financial transparency crisis after the latest report from the Court of Auditors revealed significant irregularities: public debt at 99.67% of GDP, well above the initially announced 74.41%, and a revised budget deficit of 12.3% of GDP for 2023. These accounting errors have eroded investor confidence and threaten the country’s economy.

The Court of Auditors’ report highlights unaccounted debts, opaque spending, and irregular budget transfers. These practices have inflated the debt and worsened the deficit. Senegalese economist Ousmane Dieng explains that the cash-based accounting system is outdated and that switching to accrual accounting could have prevented these adjustments. If this transition had been made, many of these errors would not have occurred, he added.

In response to the crisis, the government has suspended its IMF disbursement requests and committed to reforms, including the centralization of debt management and tighter controls over external projects. Ousmane Dieng urges investors to view the situation in context and criticizes the crisis communication. “The government must avoid sensationalism and reassure donors,” he emphasizes.

The crisis could delay or suspend several infrastructure projects funded by loans. Dieng advocates for alternative financing and the inclusion of natural resources in GDP calculations. He argues that, like Algeria, Senegal should factor in its natural resources to ease the pressure on public finances

.Dieng also stresses the importance of raising public awareness about financial literacy. Public savings schemes could help capture idle savings for development financing. “We must involve Senegalese people in financing their development,” he concludes.

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Senegal needs to undertake structural reforms to restore transparency and investor confidence. Adopting accrual accounting and ensuring rigorous public finance management are essential to maintain the country’s economic stability and secure confidence in its future.