By Toby McIntosh
The revelation that Senegal’s external debt was seriously and intentionally understated raises questions about how to assure accurate and transparent information about debt in Senegal, and in other countries, too.
The International Monetary Fund says it is looking for “urgent reforms” from Senegal, according to a March 26 IMF statement.
But the IMF has not yet said what those reforms would look like.
A key challenge would appear to be how to prevent a reoccurrence of “a very conscious decision to underestimate the debt stock,” as stated by Eddy Gemayel, the head of the recent IMF mission to Senegal. (See news report.)
The IMF and the World Bank have been trying for decades to work with countries to ensure accurate financial data, stressing improved capacity and more transparency.
And yet, understatement of external debt remains a large and continuing problem, according to reports, including one based on World Bank data.
A broad report done by the IMF legal department in early 2024, identified “critical weaknesses that hinder debt transparency.” The detailed recommendations from that report may provide ideas for legal reforms in Senegal and elsewhere.
However, specific reports on Senegal by the IMF and the World Bank in recent years, reviewed by Eye on Global Transparency, indicate no awareness of the problems in Senegal that have now been exposed.
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Senegal’s External Debt Said to Be Consciously Understated
Senegal recently revealed that its sovereign debt for 2023 wasn’t 74.4 percent of gross domestic product (GDP), as stated by the previous government, but rather 99.7 percent of GDP. Also, the budget deficit at the end of 2023 was put at over 10 percent, about double what had been reported before. The under-reporting occurred from 2019 to 2023.
The larger external debt figure was largely caused by “previously undisclosed liabilities, including hidden loans,” as the IMF put it, and was laid to the administration of former president, Macky Sall, who was elected in 2012 and defeated in 2024.
The new president as of March 2024, Bassirou Diomaye Faye, had the financial situation reassessed and the higher debt numbers were confirmed in February 2025 by Senegal’s Court of Audit. (Report in French.)
After the disclosures, Senegal’s credit rating plunged and the government now faces difficult choices to regain IMF support and investor confidence.
No Anticipation of Higher Figures by IMF, World Bank
The existence of the under-reporting of Senegal’s external debt over five years seems to have eluded the IMF, the World Bank and others.
“The risk of external debt distress” was rated as “moderate” in a June 2023 public report by the IMF and the Bank’s International Development Association (IDA).
The “Debt Sustainability Analysis” projected “external public debt” as a percent of GDP to be 59.3 percent in 2023 and then falling to 52.3 percent in 2027, radically different from the data now revealed but based on government figures at the time.
Possibly the analysis includes some hints, in dense language, about the accuracy of some of the government’s numbers related to “stock-flow-adjustors” and “state-owned enterprises.” But there was no second-guessing of the government’s bottom-line numbers.
Looking at possible future risk scenarios, even with the lower debt data, the IMF-Bank report warned there was an “urgent need for Senegal to implement critical measures to bring external and total public debt onto a downward trajectory, as currently projected.”
Similar debt figures are contained in the 2022 Article IV report about Senegal, another vehicle of IMF oversight.
Senegal Improved on World Bank Debt Transparency Scale
The IMF and the World Bank have for years touted transparency and management reforms as key to improving the accuracy and visibility of national debt obligations. They have conducted evaluations in Senegal that did not turn up major warning signs.
The World Bank has assessed national debt transparency annually since 2020 and reported that debt transparency in Senegal was improving.
The larger according to a 2021 report on the data was not positive, showing that 40 percent of low-income developing countries had not published any sovereign debt data in the last two years and that the debt data showed discrepancies of up to 30 percent of GDP. However, the Bank no longer does annual report on its annual survey, but posts only color-coded charts. (See Jan. 13, 2025 EYE article.)
The Bank rates countries using nine criteria, giving them scores of green, yellow, orange and red (the lowest). In 2020, Senegal got 7 reds, one orange and one green,. But in the latest rating, for 2024, the country had five greens, one yellow, one orange, and only two reds. Notably, one red concerned “Information on recently contracted external loans.”
It was a notable improvement. When EYE converted Senegal’s colors to the associated scores, Senegal’s overall transparency rating was 3.0 (out of 4) in 2024, more than double its score of 1.4 in 2020.
IMF Evaluation on Senegal Surfaced No Problems
In another evaluation of Senegal specifically, the IMF in 2019 conducted a Fiscal Transparency Evaluation that gave the government mostly passing marks. It said there was “a sound basis for Senegal to continue its progress toward greater fiscal transparency.”
The IMF team judged Senegal “at the average level for countries of similar income and institutional capacity.” However, the report said, “One third of all practices do not meet the requirements of a basic level (“not met”).” It made recommendations, including suggestions for “Better capturing of fiscal and financial risks and anticipate (sic) their impacts.”
The US State Department, in a 2024 assessment, applauded Senegal’s publication of audits of its budget, but noted that “it did not include allocations to and earnings from major state-owned enterprises.”
Should the Numbers Have Raised Suspicions?
The question of whether the international financial institutions should have known about the underreporting in Senegal was raised by one veteran observer, speaking not for attribution, who wrote: “They definitely turn a blind eye to this stuff. If they (or the Bank) were to dig into any number of other countries, they would find similar problems.”
“Some figures were hidden,” observed Amadou Samb, the Country Director of BudgIT Senegal, a civil society organization focused on fiscal transparency and accountability. He expressed concern that “the IMF missed something.”
Samb credits the new government with good intentions to set things right and be more transparent, but he fears that some possible IMF proposals, such as to reduce energy subsidies and cut government salaries, will create hardships. The understatement of the external debt is worrisome, he said, because with a debt load around 100 percent, “normally nobody will give you money.”
While applauding the new government’s support for more transparency, he said, “I think we have to democratize data access.” He stressed, “People are speaking Waloof and all the data is in French.”
Potential Transparency Reforms?
The IMF has yet to say what reforms it wants from Senegal, but a strongly worded 2024 IMF report on the legal foundations necessary for debt transparency may provide a menu of options.
IMF spokeswoman Julie Kozack on March 6 stressed that pressure is being brought to bear, saying that “the resolution of the misreporting in line with IMF policy is a precondition for discussions of any future financial assistance by the IMF.”
Similarly, the IMF said in its March 26 summary of its mission to Senegal March 18 to 26, 2025, that: “The team evaluated the extent of fiscal data revisions and discussed with the authorities the institutional and procedural factors that contributed to the underreporting, as well as measures to improve transparency and public financial management.”
The summary also said:
These findings point to serious lapses in budget controls and public financial reporting, underscoring the need for urgent reforms,” according to the IMF. The statement continued: “The team sought to better understand the magnitude of the misreporting and the legal, institutional, and procedural shortcomings that allowed it to occur. Discussions also focused on identifying corrective measures to enhance fiscal transparency, reinforce budget oversight, and prevent recurrence.
“The IMF staff team welcomes the Senegalese authorities’ strong commitment to fiscal transparency and accountability,” according to the statement.
Senegal’s Court of Audit report included a few recommendations to improve public financial management, noting their acceptance by the government.
One commitment (courtesy of Google Translate) is that the Minister of Finance and Budget “undertakes to make the necessary arrangements for assigning transactions financed with external resources to a public accountant. Also, the report says, “The Minister states that he has initiated a process to improve data reliability, notably with the external resource management platform, which is scheduled to be launched in 2025, after a one-year test phase.”
How these changes will be received by the IMF remains to be seen.
The IMF has not been responded to EYE’s follow-up questions.
A “ladder of transparency” was envisioned, as described in 2022 by a World Bank official. But few countries have made the climb, however, despite years of encouragement and support from the Bank and others. (See EYE article, Can the Ladder of Debt Transparency Be Climbed If the Boosts Stay the Same?, Aug. 12, 2022.)
Menu from 2024 IMF Report?
Very specific ideas for reform in Senegal might well be drawn from a February 2024 IMF “working paper,” titled Public Debt Transparency: Aligning the Law with Good Practices.
Among other things, it stresses the need for strong state audit institutions.
The IMF team surveyed the legal frameworks of 60 jurisdictions, including Senegal. The report does not comment specifically on Senegal, but reports “critical gaps” overall.
“Both low-income and developing countries and emerging market economies have critical gaps in debt transparency, and the implementation of international standards and guidelines has lagged,” according to the working paper.
A main conclusion is that the laws have “critical weaknesses that hinder debt transparency, which include weak reporting obligations, limited coverage of public debt, inadequate monitoring, unclear borrowing and delegation processes, unfettered confidentiality arrangements and weak accountability mechanisms.”
Among the findings, “Less than 50 percent of countries surveyed require debt management and fiscal reports.” And further, “[b]orrowing authorization provisions are often vague and lack a clear process for delegating that authority.”
“A robust legal framework is key to improving disclosure on SOE debt by governments and SOEs,” according to the report, referring to state-owned enterprises, SOEs.
Although the 100-page report may not directly address intentional deceptions, it at times looks in that direction.
For example, “To avoid abuse of Executive discretion, the legal framework should provide clear guidance on the conditions and scope of confidentiality arrangements in public debt contracts, parliamentary oversight, and other safeguard mechanisms such as administrative or judicial remedies.” This included a discussion of the relevance of freedom of information laws.
Senegal does not have an FOI law. In late 2024, several groups urged the new government to pass one, the Africa Freedom of Information Centre and Article 19. (See related EYE story, More Than 55 Countries Lack ATI Laws: Why Not? And What’s Being Done, Aug. 19 2024)
The Bank’s working paper also pushes for strong state audit institutions, SAIs. ‘SAIs should enjoy a broad mandate to audit public debt and debt management operations,” according to the report.
Summarizing, the report states, “Hidden, undisclosed, and opaque debt is not a theoretical matter and can be costly for debtors, creditors, citizens and the system as a whole.”
Under-Reporting of Debt a Well-Known Problem
The working paper is scarcely the only report on debt transparency issues.
Under-reporting “has been a long-standing issue,” according to a 2022 study by World Bank researchers. The same basic conclusion have been recently re-proven in more detail.
Major crises ensued after debt transparency disclosures in Mozambique in 2016 and Zambia in 2020.
The research in 2022 found that “ ‘actual’ debt stock figures increased by an average of 1.47 percent of GDP between the time they were first published and the latest World Bank debt report.”
This finding was collaborated by a 2024 study published by the National Bureau of Economic Research which found that since 1970 governments in the Global South have accrued at least $1 trillion in external debt, an average of 1 percent of each country’s GDP, that was not reported to the World Bank when it was contracted. This equating to more than 12 percent of total foreign borrowing by all countries in the study sample.
“The existence of hidden debt increases default incentives and depresses sovereign bond prices. To compensate investors for the uncertainty about true debt levels, sovereign borrowers need to pay higher spreads for given levels of market debt,” according to the four authors, who include former World Bank officials.
They report that “only countries with strong fundamentals and low hidden debt levels benefit from increased transparency.” The comment continues: “In contrast, countries with high levels of hidden debt are likely to find exposure to greater scrutiny to be costly. This finding suggests that transparency policies are best implemented during good times to avoid the negative welfare effects of exposing hidden debts during times of crisis.”
One author, Cesar Sosa-Padilla, an associate professor of economics at the University of Notre Dame, summarized, “We find that public external debt is consistently underreported, and that this phenomenon is more prevalent in countries with weak institutions.”
Suggestions for reform were posted by Michele Robinson, a debt management expert from Jamaica who consulted at the IMF, in a commentary headlined, Here we go again – The Case of Senegal. She wrote:
Governments can certainly do more. I think as a start, governments need to modernize debt legislation and include disclosure provisions. I think that governments also need to adequately resource their supreme audit institutions to equip them to undertake not only financial audits, but performance and compliance audits as well. Sadly, not every government is so inclined. Parliamentary oversight committees also need to be established. Governments must also resist the urge to cave in to unnecessary confidentiality clauses in loan contracts. Finally, debt management offices need to widen their coverage of debt and, especially, report on guaranteed debt and other contingent liabilities.
IMF-Bank Assessments Criticized
The IMF and the World Bank have for decades had initiatives about sovereign debt. Much of the attention is on topics such as restructuring debt, but accounting practices and transparency are regular topics.
The relevant IMF website page summarizes: “The IMF’s analytical work helps identify sovereign debt risks and provides policy advice on how to address these risks at an early stage. Jointly with the World Bank, the IMF fosters debt transparency and supports countries in strengthening their capacity to report and manage their public debt. Technical support to member countries on formulating a debt management strategy and developing their local currency bond markets are at the core of such assistance that promotes a prudent debt structure and adds resilience to withstand economic shocks.”
How this plays out in practice is difficult to determine, because the aid and advice is provided to individual countries and not centrally summarized.
However, the Debt Sustainability Analyses (DSAs), the kind of report used to assess Senegal, most recently in 2023, has come in for critical scrutiny.
In 2023, an independent evaluation was conducted of the joint World Bank–International Monetary Fund (IMF) Low-Income Country Debt Sustainability Framework (LIC-DSF), described as “a cornerstone of debt sustainability analysis in IDA-eligible countries.” The evaluation made recommendations for improving DSAs.
The chapter of “Debt Data” says the framework “depends on the assumption that data on the stock of public and publicly guaranteed debt are timely and accurate and include all debt-producing liabilities.”
“However,” the report continued, “Debt Sustainability Analyses (DSAs) do not clearly and routinely assess the degree of confidence World Bank and International Monetary Fund staff have in the data on which their analysis is based.”
A multi-donor trust fund at the Bank, the Debt Management Facility, is an effort “to equip beneficiaries of debt relief and other lower-income countries with the capacity and training to keep debt burdens at manageable levels.” It sponsors the Debt Management Performance Assessment (DeMPA), a diagnostic tool used to evaluate a country’s debt management processes and institutions.” Senegal was last assessed in 2010.
Central Database on Sovereign Debt Did Not Succeed
The Senegal situation revived memories of unsuccessful efforts to create a global database on soveirgn debt.
Tim Jones, Head of Policy at Debt Justice, a non-governmental organization, told EYE, “This case shows yet again why a global debt registry is needed, where all borrowers and lenders disclose detailed information on loans when contracts are signed.”
An effort along these lines did not succeed, undercut by encouraged by a lack of participation by lenders. The Group of 20 countries and the Institute of International Finance (IIF), a business group., encouraged the creation of a central database on sovereign debt. It was run by the Organization for Economic Cooperation and Development (OECD), based on input from financial institutions. But an OECD report revealed that only two banks had contributed data. (See EYE article, G-20 Effort on Debt Transparency Comes Up Short; Do Other Solutions Exist?, Aug. 11, 2022.)
Jones commented: “Private banks made voluntary commitments six years ago to disclose loans and have failed to do so. The voluntary approach has failed. Lenders need to be made to disclose the existence of their loans.”
Another approach called for multilateral institutions, including the IMF and the World to exert more influence over the shape and content of national transparency regimes. It was advocated in a January 2022 report by the Bretton Woods Committee’s Sovereign Debt Working Group (SDWG), but was not supported by the IMF or the Bank.
