Senegal: Washington wants to speed up debt restructuring to prove the effectiveness of the G20 mechanism

The United States wants Senegal’s debt restructuring to be completed in less than a year. This objective was put forward at the end of last week by Erin Browne, US Assistant Secretary of the Treasury for International Affairs, on the sidelines of the annual meetings of the International Monetary Fund (IMF) and the World Bank in Bangkok.

« We want this to happen quickly, transparently and as quickly as possible, » the US official said. While no official timetable has yet been agreed, it believes that a period of less than twelve months is a target towards which stakeholders should strive.

Washington considers the Senegalese issue to be an example of the progress made under the G20 common framework, a mechanism created in 2020 to coordinate sovereign debt restructurings between borrowing countries and their creditors. The statement comes a day after a meeting of the Global Roundtable on Sovereign Debt, co-chaired by Erin Browne and the heads of the IMF and World Bank. This body is seeking to reduce negotiation times, after the prolonged restructuring observed in Zambia and Ghana.

Senegal is trying to restore the sustainability of its public debt after the revelation, in 2024, of undeclared loans by the previous administration. Audits have since led to a reassessment of public debt to around 130% of GDP, including the liabilities of some state-owned enterprises and state-guaranteed loans.

Dakar is seeking to speed up discussions with its creditors by conducting several negotiations in parallel. In particular, the Government has proposed four separate committees representing bilateral creditors, bondholders, commercial banks and regional development institutions.

According to reports, the Paris Club has indicated that an agreement could be reached within six to nine months, a prospect that has not been publicly confirmed by the organization.

The outcome of the negotiations also conditions the implementation of a new financing program of 2.2 billion dollars negotiated with the IMF. On Wednesday, IMF Managing Director Kristalina Georgieva was optimistic about Senegal’s ability to reach an agreement with its creditors.

For Dakar, the challenge now is to reconcile the speed of the negotiations with sufficient relief from the country’s financial obligations. The terms of the debt treatment, particularly the distribution of the effort between the different categories of creditors, remain to be specified. A swift conclusion would also be a first concrete result of improvements to the G20 Common Framework, whose procedures have so far been criticized for being slow.

TheHatLady