By S&P Global Ratings cut Senegal’s long-term foreign-currency sovereign credit rating to “CC” from “CCC+” and its local-currency rating to “CCC” from “CCC+” on Friday, citing the government’s plan to restructure its debt.
S&P assigned a negative outlook to both ratings, saying Senegal’s proposed debt treatment was likely to leave foreign-currency creditors receiving less than originally promised.
The downgrade follows Senegal’s announcement on Sept. 1 that it would seek debt treatment under an enhanced version of the G20 Common Framework, while excluding debt denominated in the regional CFA franc from the restructuring.
The rating action also came after Senegal and the International Monetary Fund reached a staff-level agreement for a new 36-month financing programme worth about $2.2 billion, subject to approval by IMF management and the Fund’s executive board.
S&P said the restructuring process would probably result in foreign-currency creditors receiving less than they were originally scheduled to receive, either through a reduction in principal, interest payments or changes to repayment terms.
The agency said Senegal’s foreign-currency debt remained current but that a distressed exchange or default appeared highly likely as a result of the restructuring process.
A distressed exchange occurs when creditors receive terms that are less favourable than those originally agreed because of financial difficulties faced by the borrower.
Senegal’s government announced the Senegal Debt Treatment Plan on Sept. 1, saying it was intended to reduce the country’s debt-service burden and restore debt sustainability.
The plan covers foreign-currency obligations but excludes CFA franc-denominated debt because of the importance of the regional market to government and wider economic financing, according to Senegal’s Ministry of Economy, Finance and Planning.
The government said it had informed official creditors of its intention to seek treatment under an enhanced G20 Common Framework. The framework is designed to coordinate debt restructuring among official creditors, with Senegal saying it would seek faster information-sharing and parallel consultations with relevant creditors.
S&P said the exclusion of local-currency debt could create further challenges because Senegal has a large stock of domestic debt.
“Given the sizable stock of local currency debt, we believe there are challenges to excluding domestic debt from any deal,” S&P said, according to its research update.
The agency said this raised the possibility that local-currency debt could eventually be included in a restructuring.
The debt restructuring plan is being pursued alongside a proposed IMF programme intended to support Senegal’s economic and financial reforms.
IMF staff and Senegalese authorities agreed on a 36-month Extended Credit Facility arrangement worth about $2.2 billion, equivalent to 1.537 billion Special Drawing Rights, or 475% of Senegal’s IMF quota.
The agreement is not yet final. The IMF said it requires approval by its management and executive board, as well as corrective measures related to a previous misreporting case and financing assurances from Senegal’s partners.
The proposed IMF programme is aimed at restoring debt sustainability, strengthening public finances and reducing fiscal and external vulnerabilities.
The Fund said Senegal’s economy grew 6.7% in 2025, helped by the first full year of oil production, while non-hydrocarbon growth was 2.2%. Inflation stood at 1.4%, and non-hydrocarbon growth recovered to 4.7% year-on-year in the first quarter of 2026.
Senegal’s government said its fiscal deficit narrowed to 6.4% of GDP in 2025 from 13.4% in 2024, following reforms aimed at strengthening public financial management and transparency.
Despite strong economic growth in 2024 and 2025, the government said fiscal space had narrowed in 2026, putting greater pressure on its ability to finance public investment and meet other spending priorities.
The Ministry of Finance said real GDP growth was projected at 2.7% in 2026, after expanding 6.5% in 2024 and 6.7% in 2025.
The government said the Senegal debt restructuring plan would reduce debt-service and refinancing requirements and gradually create fiscal space for priority spending, including social programmes and payments to private-sector suppliers.
S&P said it could raise Senegal’s foreign-currency rating if a distressed exchange were successfully completed. It said the local-currency rating could also improve if the risk of a restructuring of local-currency debt fell significantly and the government’s liquidity position strengthened.
The downgrade places Senegal’s sovereign credit deeper into distressed territory and increases the focus on negotiations between the government and its creditors.
The outcome of those negotiations, including the final scope of the debt treatment and the terms offered to creditors, will be central to Senegal’s credit outlook, while the proposed IMF programme remains subject to formal approval.
