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Senegal Bonds Fall as IMF Sounds Warning Over Fiscal Deficit - BLOMBERG
(Bloomberg) -- Senegal’s dollar bonds fell after the International Monetary Fund said the African nation’s fiscal position was expected to deteriorate.
The bonds were the worst performers in a Bloomberg index of emerging and frontier sovereign dollar debt. The yield on notes due 2048 climbed 14 basis points to 9.78%.
Senegal’s bonds have been volatile since President Bassirou Diomaye Faye signaled plans to dissolve the opposition-controlled parliament last month. On Friday, he disbanded the lawmaking body in an effort to consolidate power and push forward his reform agenda. Elections for new representatives will be held on Nov. 17, he said in a statement.
Senegal President Dissolves Parliament (Video)
In its end-of-mission statement, the IMF said Senegal’s economy slowed in early 2024, with growth in key sectors like mining and construction weaker than expected. The fiscal deficit widened due to reduced revenues and rising energy subsidies.
The international lender highlighted the urgent need for reforms, including cutting untargeted subsidies and streamlining tax exemptions to stabilize public finances and reduce debt.
Last year, the IMF reached a staff-level agreement with Senegal on a $1.5 billion facility to support a program of economic reforms.
Faye, who won a presidential vote in March by a landslide, is seeking a legislative majority to reassure voters and investors that he can fulfill his pledges to tackle corruption, ease a cost-of-living crisis and review oil and gas contracts with Senegal’s foreign partners. He’s faced a deadlock with a National Assembly dominated by lawmakers loyal to his predecessor, Macky Sall.
The “end-of-mission statement published by the IMF points to some fiscal slippage, in contrast to earlier government reports that suggested otherwise,” said Michael Kafe, an economist at Barclays Bank Plc, in a note to clients. “That said, if the upcoming elections lead to a parliamentary majority, it would help avoid unnecessary delays” in implementing the economic program, he said.
