Senegal bonds fall as Sonko refuses to back budget bills

Senegal’s international bonds fell sharply on Tuesday after National Assembly President Ousmane Sonko said lawmakers would not back budget legislation. The move raises fresh doubts over how quickly the government can push ahead with its debt rework.

Bond losses

All of Senegal’s euro and dollar denominated bond maturities fell more than a cent on the day. Longer dated debt suffered the sharpest losses. The 2037 bond dropped 2.166 cents to bid at 48.931 cents on the euro, Tradeweb data showed.

Sonko remains one of Senegal’s most powerful political figures despite being fired as prime minister by President Bassirou Diomaye Faye in May. He leads the ruling PASTEF party, which controls 130 of parliament’s 165 seats. He was elected speaker with the backing of 132 lawmakers. That gives him significant influence over Faye’s legislative agenda.

IMF risk

Without parliamentary approval of the revised budget, the government risks delaying the International Monetary Fund program that underpins its entire debt restructuring strategy.

Speaking at a news conference on Monday, Sonko criticised the government’s decision to pursue debt treatment under the G20 Common Framework. He said Senegal faced a cash-flow problem rather than a need to reduce its overall debt burden. He warned that lawmakers would not vote for the 2026 revised finance bill due to be discussed in parliament or the 2027 draft budget. He said this was to show opposition to the government’s intention to lower fuel subsidies.

Fiscal picture

The amended 2026 budget bill paints a sharply deteriorating fiscal picture. It cuts real GDP growth to 2.7% from roughly 5% in the original budget. It widens the deficit to 7.6% of GDP from 5.4%. The gap is driven largely by a tripling of energy subsidies to 790.3 billion CFA francs ($1.36 billion) from 250 billion.

According to the 2027 draft bill, the government plans to reform energy subsidies to direct resources toward the most vulnerable populations. The goal is to reduce the total cost of energy subsidies to no more than 1% of GDP per year by 2029, the bill shows. It did not provide figures for the next year.

Senegal’s total debt stood at 105.3% of GDP at end-2025, according to authorities. A debt audit last year revealed that public debt, including state-owned enterprises, had ballooned to roughly 112% of GDP at end-2024. That was nearly double a previously reported figure of about 73%.

The government reached a staff-level agreement with the IMF in early September for a $2.2 billion, 36-month Extended Credit Facility to support its reform program.