The Senegal government seeks financial stability with debt bonds aimed at the expatriates
By Jaume Portell Caño
2025 will be a key year for the plans of the Senegalese government. After reaching the presidency in March and consolidating the legislative majority in November, Bassirou Diomaye Faye wants to structurally strengthen economic ties with the expatriates. It seeks to do so through the “diaspora bonds”, a financial instrument that would allow the country to be selling debt to the Senegalese abroad, which in 2023 sent 2,940 million dollars in remittances. Senegalés Saiba Bayo political scientist believes that the figure is higher: «There are money flows that are not registered, but that they reach Senegal through informal channels. The challenge will be precisely to capture that extra money.
The 2025 finance law mentions these bonds as a tool to replace “medium and long term” external loans in dollars with “debt in local currency, with all the advantages in terms of lower exposure to the risk of change and types of types of Variable interest ». The domestic debt market, “with a good absorption capacity,” is currently encrypted in 1.5 billion Franks CFA (about 2 300 million euros).
The idea of capturing the diaspora money is not new. In 2019 they tried to receive 30 million euros through the Banque of L’Abitat du Senegal. The minimum participation was 10,000 Franks CFA –15 euros– and the annual interest rate of 6.25 % during its five years. Although there was sufficient demand, the contributions of the diaspora were 43 % – 60 % had been marked as an objective. The rest was bought by financial institutions.
The financing has been the Achilles heel of the Senegalese executive in its first year of government: after an audit they announced that the deficit and debt left by the Macky Sall cabinet were higher than expected: between 2019 and 2023 it had not been of 5.5 % annual, but of double. The debt was 83 % of GDP, ten points higher than had been announced until then. Consequently, their most ambitious plans were in danger. The agreement with the IMF, signed in June 2023 – and canceled after the publication of the audit – promised periodic financing in exchange for adjustments. This program – 850 million dollars distributed in three years – recommended that the Government of Dakar a reduction of energy subsidies, an unpopular measure for the new government, whose campaign was based on promising to lower the cost of life to the Senegalese more humble The Seneweb digital links the idea of diaspora bonds to the executive’s will to disobey IMF requests.
At the moment, life without the IMF money, waiting to obtain a new financing agreement, has not been simple. The rupture of the program led Senegal to request a loan of 300 million dollars in October to 6.33 %. This, together with the EuroBone (750 million dollars) that the country sold in June to 7.75 %, have been a sample of the delicate fiscal situation of the country. The Moody’s qualification agency reduced the Senegalese debt note shortly after the audit and announced that it would do so if it was known that “the government’s liquidity pressures are superior to what is currently expected.” In this scenario, the success of the diaspora bonds will be vital for the credibility of the Executive before its electorate.
In the image, Senegalese Prime Minister, Ousmane Sonko (d.), Appeared on September 26 with the Minister of Justice, Ousmane Diagne, to present the government’s economic plan. Photography: Seylou/Getty
