Moody's Rating Downgrade of Senegal
Moody’s Investors Service downgraded Senegal’s long‑term foreign‑currency, local‑currency and foreign‑currency senior unsecured issuer ratings to Caa2 from Caa1 on the day of the announcement, while maintaining a negative outlook. The short‑term issuer ratings were affirmed at Not Prime.
The downgrade is attributed to rising refinancing pressures, a weakening of debt‑affordability, and limited prospects for debt reduction, all of which have heightened the likelihood of a default event. The prolonged absence of an IMF programme has forced Senegal to rely more heavily on regional market funding to meet financing needs that amount to roughly 25 % of GDP, thereby increasing rollover risk and interest‑cost burdens.
Moody’s projects that even with sustained fiscal adjustment, government debt will stabilise around 100 % of GDP through 2028, as interest costs remain significant. Government liquidity risk is described as acute, with gross financing needs estimated at about 25 % of rebased GDP in 2026. These needs are being met through a mix of regional market borrowing (including issuance equal to 8 % of GDP since the start of the year), commercial facilities, and residual World Bank support.
Interest payments have risen sharply, climbing to 23.7 % of revenue from 16.1 % in 2023. While the fiscal deficit narrowed markedly in 2025 due largely to cuts in capital spending, weaker growth and higher subsidy costs projected for 2026 are expected to keep government debt near 100 % of GDP through 2028.
Political developments have added to the risk profile: the dismissal of former Prime Minister Ousmane Sonko and his subsequent election as President of the National Assembly have intensified institutional tensions between the executive and legislature, raising the risk of delays to fiscal measures.
In addition, Senegal’s local and foreign‑currency country ceilings were lowered to B1 and B2 respectively, down from Ba3 and B1. The Caa2 rating aligns with a debt‑treatment approach focused on alleviating liquidity pressures, implying limited losses for private‑sector creditors and an associated loss‑given‑default range of 10 %–20 %.