Heavily indebted Senegal denied a Financial Times report that it had secretly borrowed 650 million euros ($754 million) to avoid defaulting, claiming it had acted in accordance with "market transparency rules".
The government, which came to power in April 2024, accuses the administration of former President Macky Sall of having concealed a colossal level of debt.
The Financial Times, however, reported on Monday that the new government had secretly "drawn 650 million euros from development finance body Africa Finance Corporation and First Abu Dhabi Bank last year, in loans giving them privileges over existing bondholders."
In a statement released Tuesday evening, the Senegalese Ministry of Finance said that these transactions "are part of the strategy to diversify sources and instruments of financing," as the country strives to raise funds to repay its massive debt and cover the state's operating expenses.
According to the FT, Senegal contracted these loans through "newly issued domestic sovereign bonds, using derivative products known as total return swaps." Return swaps are financial instruments that allow the creditor to be repaid first in the event of default by the borrower.
The Senegalese government stated that these transactions, which carry an interest rate of 7.1%, are "far more advantageous" than those carried out on international markets and were not concealed "in accordance with market transparency rules".
The agreement reached with AFC, a Nigerian company, last May enabled Senegal to raise up to 350 million euros, according to the Financial Times.
In June, Senegal signed a new three-year swap with First Abu Dhabi Bank, allowing it to borrow 300 million euros, the newspaper added.
These two loans mature in 2028.
Earlier this month, Senegal was able to repay $471 million of its international debt, despite fears of default expressed by economic observers. The country faces a budget deficit of nearly 14% of GDP and a public debt projected to reach 132% of GDP by the end of 2024.
The current government accuses the administration of former President Sall, who led the country from 2012 until his defeat in the 2024 elections, of having concealed the true extent of the budgetary situation.
A team from the International Monetary Fund (IMF), which visited Senegal a year ago, confirmed that officials had made false statements regarding budget deficits and public debt for the period 2019-2023.
The IMF has suspended a $1.8 billion aid program it had granted in 2023, pending further information and commitments from the new Senegalese authorities.
