Ratings agency Moody’s said Monday it had downgraded Senegal’s outlook owing to its weak fiscal and debt outlook, following an audit of state books dubbed “catastrophic” by the prime minister.
In a statement, Moody’s said it had downgraded Senegal’s long-term issuer and foreign-currency senior unsecured ratings to B3 from B1 and changed the outlook to negative following a review.
The rating keeps Senegal one step above a C-level rating where issuing countries are considered to be vulnerable to default.
With central government debt estimated at 99.7 percent of GDP in 2023, outpacing estimates by 25 percent in a government audit which concluded last September, Moody’s saw Senegal as being “more exposed to adverse shocks than we had previously estimated,” given “a very weak fiscal and debt position will complicate fiscal consolidation efforts.”
A Senegal Court of Audit report earlier this month highlighted poor financial management of the country’s finances between 2019 and 2024 and invalidated official data under the stewardship of previous president Macky Sall.
By way of example, a recalculation of the budget deficit for 2023 ramps the figure up to 12.3 percent of gross domestic product compared with an initially announced 4.9 percent.
Prime Minister Ousmane Sonko last Friday told lawmakers the report by the auditors was “particularly catastrophic and concerning.”
He announced there would be spending “rationalisation” measures as a result and a new audit by the end of April.
In early October, Moody’s had already downgraded Senegal’s rating from Ba3 to B1, pushing it into the “highly speculative” category.
“The downgrade is driven by the substantially weaker fiscal metrics revealed by Senegal’s Court of Auditors,” said Moody’s.
“The scale and nature of the discrepancies significantly limit Senegal’s fiscal space and contribute to elevated funding needs, while indicating material past governance deficiencies.”
The court, which is independent of government, found evidence of large-scale financial mismanagement, including what would constitute criminal offences as well as significant off books spending “not traced in the state’s accounts.”
Noting the “serious failings” highlighted by the auditors, the government warned legal proceedings may follow against those found responsible.
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