By Cheikh Fall, Founder of The Third Path Africa
Abstract
As Senegal’s new government confronts the legacy of shadow borrowing under Macky Sall, the IMF has frozen disbursements — citing misreporting it failed to detect while actively engaged in oversight. This op-ed examines the institutional blind spots that enabled off-books debt, the unjust burden placed on reformers, and the urgent need for a new compact between African states and global financial institutions. Senegal deserves support, not punishment, for choosing transparency.
I. The Hidden Debt: How Sall’s Administration Concealed Billions
Between 2019 and 2024, Senegal’s fiscal architecture was quietly distorted by a series of off-books borrowing schemes orchestrated under President Macky Sall. While official debt figures suggested a manageable trajectory — with debt-to-GDP ratios hovering around 74% — independent audits commissioned by the current administration have revealed a far more troubling reality. The actual debt burden likely exceeded 100% of GDP, driven by undisclosed liabilities, state-backed guarantees, and non-transparent financing arrangements involving state-owned enterprises (SOEs).
These shadow borrowing practices were not isolated incidents. They formed a pattern of fiscal obfuscation designed to preserve Senegal’s access to concessional loans and international bond markets. Key mechanisms included:
- Off-balance-sheet borrowing by SOEs, with implicit state guarantees never disclosed to the IMF or public
- Underreporting of budget deficits, achieved by deferring payments and reclassifying expenditures
- Use of opaque financing instruments, including supplier credits and syndicated loans, that bypassed parliamentary oversight
The result was a distorted macroeconomic picture — one that allowed the Sall administration to present Senegal as a model of fiscal discipline while accumulating unsustainable debt. This deception not only misled international lenders but also undermined domestic accountability, as key budgetary decisions were shielded from public scrutiny.
Preliminary estimates suggest that $7 to $13 billion in liabilities were hidden from official records. These figures dwarf Senegal’s annual budget and represent a generational burden on public finances. More critically, they expose a systemic failure in the country’s fiscal governance — one that cannot be disentangled from the institutions that were meant to provide oversight.
II. The IMF’s Surveillance Failure
The International Monetary Fund was not a passive observer during the years of Senegal’s fiscal misreporting. It was an active partner — conducting regular Article IV consultations, approving Extended Credit Facility (ECF)disbursements, and issuing optimistic assessments of Senegal’s macroeconomic stability. Yet despite its embedded presence, the IMF failed to detect the scale and nature of the shadow borrowing that now threatens the country’s fiscal credibility.
This failure is not merely technical — it is institutional. The IMF’s surveillance framework relies heavily on data provided by national authorities, but it also includes independent verification mechanisms, risk assessments, and debt sustainability analyses. In Senegal’s case, these tools proved inadequate. The Fund did not flag the growing liabilities of state-owned enterprises, nor did it question the consistency of reported deficits with observed spending patterns. It accepted official figures at face value, even as the fiscal reality diverged sharply from the narrative.
In a rare admission, IMF mission chief Edward Gemayel acknowledged that the misreporting allowed the Sall administration to “send a more positive signal to financial markets” and “borrow more than would have been possible if the debt had been accurately reported.” This statement, while candid, underscores a deeper problem: the IMF’s failure to act as a credible watchdog when it mattered most.
The consequences are now being borne by a government that had no hand in the deception. The IMF has frozen $1.8 billion in disbursements, citing misreporting that occurred under a previous administration. Yet it has offered no public accounting of its own oversight failures, nor has it proposed reforms to prevent similar blind spots in future engagements.
This asymmetry — where African governments are held to strict compliance standards while multilateral institutions evade scrutiny — undermines the very principles of partnership and accountability that the IMF claims to uphold.
III. The New Government’s Response: Transparency and Reform
Faced with the staggering legacy of concealed debt, Senegal’s new leadership has chosen a path few governments dare to take: full transparency. Within weeks of assuming office, President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko commissioned independent audits, released findings to the public, and initiated criminal investigations against former officials implicated in the shadow borrowing schemes. This was not just a political gesture — it was a strategic reset of Senegal’s fiscal governance.
The government’s response has been swift and principled:
- Audit disclosures were shared with the IMF and made publicly available, breaking with decades of opacity
- Legal proceedings have been launched against key figures in the previous administration, signaling a commitment to accountability
- Institutional reforms are underway, including the consolidation of public accounts under a single treasury framework and the overhaul of debt management protocols
These actions reflect a broader philosophy: that sovereignty must be built on credibility, and that economic reform must begin with truth-telling. In choosing transparency over expediency, the Faye administration has demonstrated a rare political courage — one that should be met with international support, not financial punishment.
Yet the IMF’s response has been tepid. Despite receiving full cooperation from Senegalese authorities, the Fund has not approved a waiver for the misreporting nor resumed disbursements. This has forced Senegal to seek short-term financing from regional markets at higher interest rates, compounding the fiscal pressure on a government already navigating a fragile economic recovery.
Prime Minister Sonko has rightly questioned the fairness of this posture:
“We are being punished for a crisis we did not create. The IMF was present, monitoring, and yet failed to act. Now they freeze funds while we try to clean up the mess.”
This moment is not just about Senegal. It is about the credibility of reform itself — and whether global institutions are willing to support governments that choose integrity over denial.
IV. Punishment vs. Partnership: Rethinking IMF Accountability
The IMF’s decision to freeze disbursements in response to past misreporting raises a fundamental question: Is the Fund a partner in reform, or merely a creditor enforcing compliance? If transparency is met with financial reprisal, then the incentive structure for reform collapses — and the message to African governments becomes clear: concealment is safer than disclosure.
This punitive posture undermines not only Senegal’s recovery but the broader credibility of the IMF’s engagement across the continent. It suggests that institutional failures within the Fund — including its inability to detect off-balance-sheet borrowing — carry no consequences, while governments that expose those failures bear the cost.
Such asymmetry is unsustainable. If the IMF is to remain a legitimate actor in African development, it must:
- Acknowledge its own surveillance failures and publish an internal review of its engagement in Senegal from 2019–2024
- Reform its monitoring frameworks to include deeper scrutiny of SOE liabilities, supplier credit arrangements, and fiscal opacity risks
- Establish a transparency incentive mechanism, where governments that disclose past misreporting are supported — not penalized — in their reform efforts
Senegal’s case should serve as a precedent, not a cautionary tale. The country’s leadership has demonstrated that reform begins with truth. Now the IMF must prove that it can respond with fairness.
This is not a call for leniency. It is a call for shared accountability — where both governments and institutions are held to the same standards of integrity. Anything less risks entrenching a cycle of mistrust and fiscal fragility across the Global South.
V. Conclusion: Justice for Senegal, Reform for the IMF
Senegal stands at a crossroads. Its new leadership has chosen transparency over denial, reform over inertia, and sovereignty over submission. In exposing the fiscal deception of the past, it has not only revealed the fragility of its own institutions but also the blind spots of those meant to safeguard them.
The IMF now faces a choice of its own. It can continue to enforce compliance through punitive measures, ignoring its own failures and undermining reformers. Or it can evolve — embracing a model of partnership that rewards transparency, supports institutional rebuilding, and acknowledges shared responsibility.
Justice for Senegal means more than resumed disbursements. It means a public reckoning with the failures that enabled shadow borrowing. It means a new compact between African states and global financial institutions — one rooted in fairness, mutual accountability, and respect for sovereign reform.
The path forward is clear. Senegal has done its part. Now the IMF must do the same.