Moody's downgrades Senegal's sovereign rating to Caa2 with a negative outlook

This marks the fifth downgrade for the country in just over a year, following a series of reductions that began in October 2024. The rating agency attributes this decision to a heightened risk of default, stemming from persistent liquidity tensions and the potential need for debt treatment to alleviate these issues. Moody's also points to increased refinancing risks and a high debt burden.

Despite ongoing discussions with the IMF, the prolonged absence of concessional financing and a fiscal anchor forces Senegal to rely more on regional financial markets for debt refinancing, as access to international capital markets is considered prohibitive. The agency notes that interest payments have surged from 16.1% of state revenues in 2023 to 23.7%, illustrating the growing financial pressure on public finances. While acknowledging the government's commitment to reducing the deficit, Moody's highlights limiting factors such as social pressures, political and institutional tensions, slower-than-expected growth, and high subsidies, particularly for energy.

The agency warns that an insufficient fiscal adjustment could exacerbate liquidity tensions and jeopardize debt sustainability. Dakar has consistently responded to previous downgrades by denouncing the analyses as speculative, subjective, and biased, arguing they do not reflect the country's economic fundame