Debt management, tax performance: Ndèye Nangho Dioum lists the issues and challenges

Public debt management stands out as one of the main challenges for Senegalese public finances. At a time when the country is seeking to restore its budgetary balances and is awaiting a new program with the IMF, Tax and Lands Inspector Ndèye Nangho Dioum analyzes the economic and financial issues of the day.

Senegal is facing a debt wall. At the end of the 2024 financial year, the outstanding public debt stood at a critical level of CFAF 23,666.8 billion, representing nearly 118.8% of gross domestic product (GDP). Beyond this impressive stock, it is the short-term depreciation profile which threatens to saturate all state finances. According to the most recent financial projections, debt service is preparing to absorb all available resources and say that the foreseeable charges for 2026 amount to 5,497.92 billion FCFA compared to tax revenues which peak at 5,384.8 billion FCFA. In a column entitled “Debt management put to the test of political temporality”, the Inspector of Taxes and Lands Ndèye Nangho Dioum warns of the imminent collision between the political calendar and macroeconomic reality. According to him, the financial sustainability of the State depends on three key variables: the apparent interest rate (which reached 4.59% in 2025 and rises to 4.79% in 2026), the debt to GDP ratio and the average maturity of financing instruments (falling to only 3.6 years for domestic debt).

Faced with the urgency of the situation, she believes that economic trade-offs can no longer suffer from any political display or short-term communication measures. The technical diagnosis is made indisputably by observers of the financial scene. It is based particularly on the in-depth audit carried out by the Forvis Mazars firm, delivered in July 2025, as well as on the Public Debt Statistical Bulletin published in July 2026 by the Ministry of the Economy, Finance and Planning. These administrative documents highlight financial dynamics that are worrying for the country’s budgetary trajectory.

A tax effort that could be improved

The most alarming indicator undoubtedly remains the upward trajectory of debt service. During the year 2025, the repayment of principal and interest swallowed up more than 4,357.5 billion FCFA; which is very precisely equivalent to the overall tax revenues mobilized over the same period. This burden included 3,269.4 billion FCfa dedicated to the repayment of principal and 1,088.1 billion FCfa devoted to interest.

For the 2026 financial year, mathematical projections describe a negative jaws effect since financial charges will simply exceed expected tax resources, creating an immediate deficit. Therefore, Ms. Dioum finds that the observation has an undeniable mechanical character. She argues that the State has entered into a structural dependence on debt. As own revenues no longer manage to simultaneously cover current operating expenses, priority investments and debt service, each new public expenditure thus systematically generates a new issue of securities on the financial markets. As proof, the financing need for the 2026 financial year is estimated at 6,075.3 billion FCfa.

To try to redress the situation and reassure technical partners, the executive is banking on its Economic and Social Recovery Plan (Pres) unveiled in August 2025. This macroeconomic program anticipates the collection of 3,173 billion FCFA in additional revenue by 2028, including an intermediate objective of 703.6 billion FCFA set for the year 2026. To achieve this, the authorities are counting on aggressive optimization of the tax base as well as an ambitious valorization of the State’s land assets, hoping to draw 1091 billion FCFA from the recycling of land assets.

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However, this strategy is considered far too optimistic by the inspector who instead calls for caution. She points out that the concrete budgetary achievements for the first quarter of 2026 only showed 54.2 billion FCfa, marking a significant delay compared to the initial targets set by the government. According to her, the expansion of the tax sector and the reduction of the informal economy are part of profound structural reforms, which are necessarily long-term. The national tax effort, although there is room for improvement (the effective tax pressure rate stands at 18.9% of GDP in 2025 for a potential estimated at 25.3%), will not be able to respond alone to the massive repayment peak expected over the critical period from 2026 to 2028.

Finding itself deprived of competitive and affordable access to international financial markets, Dakar made a massive pivot towards the WAEMU regional financial market. This technical option was favored with the aim of ensuring the regular rolling of bond maturities and maintaining the immediate liquidity of the Public Treasury. Proof of this rush: the State raised 4,004 billion FCFA in 2025, compared to only 998 billion FCFA in 2024. Ndèye Nangho Dioum underlines that current refinancing takes place at interest rates significantly higher than the bond lines they are intended to replace. While the average cost of central government debt was 3.9% at the end of 2024 (5.3% in the local market), new regional issues in 2026 now require yields of between 7% and 8%.

In his eyes, the result of this policy is similar to an increase in the overall cost of debt and an increase in short-term refinancing risk. Thus, the theoretical advantages of a debt denominated in local currency, which eliminates exchange risk, are today completely erased by the increase in risk premiums demanded by players in the Union market.

The expert demonstrates that the average cost of public debt currently and regularly exceeds the growth rate of the non-hydrocarbon economy, which stood at 2.2% in 2025. This situation maintains, in fact, a primary deficit at a high level (-401.7 billion FCFA in 2025, or -1.8% of GDP) and thwarts efforts to stabilize the macroeconomic trajectory.

Change paradigm

The recent creation of a General Directorate of Financing and Debt makes it possible to rationalize the country’s institutional governance. However, according to the inspector’s analysis, this administrative modernization remains largely insufficient given the rigidity of the current liability structure. For Ndèye Nangho Dioum, the classic range of budgetary consolidation tools and transfers of public assets have reached their objective limits. This is why she calls for a radical change in the economic paradigm.

According to him, it becomes essential to initiate without further delay a pragmatic renegotiation of maturities as well as general financial conditions with certain categories of strategic creditors. She maintains that postponing this difficult choice would risk triggering a massive crowding out of the private sector in the regional market while permanently drying up the State’s room for maneuver to carry out its public policies.

In addition to these simple accounting aggregates, this situation raises the fundamental question of financing Senegal’s economic development. When debt service absorbs the entirety of tax margins, the State loses its capacity to finance, independently, basic infrastructure, public health systems as well as essential educational reforms for young people. In his eyes, the major risk lies in lasting economic stagnation, caused by the lack of productive investments from the State.

Pathé NIANG