by Duncan Miriri
NAIROBI (Reuters) – Senegal’s dollar bonds fell on Friday after a government audit revealed higher debt and deficit figures than the previous administration, Tradeweb data showed.
Recently elected President Bassirou Diomaye Faye, who ordered the audit, accused the previous government of reporting false data but stressed the challenging task facing the West African nation, which is already struggling with slower economic growth.
“The announcement does sound like a credit-damaging event,” said Evghenia Sleptsova, senior emerging markets economist at consultancy Oxford Economics.
Dollar bonds fell more than 2 cents in early trading before paring losses and by 1200 GMT were trading around 1.3 cents per dollar in a range of 73.01 cents to 85.52 cents.
The International Monetary Fund, which has a $1.9 billion aid program for Senegal, said the government had shared its preliminary audit findings and that it was working with it to determine appropriate next steps.
The audit showed a deficit of more than 10% at the end of 2023, compared with about 5% reported by the previous government, Economy Minister Abdourahmane Sarr announced behind schedule on Thursday.
Meanwhile, according to the audit, public debt averaged 76.3% of GDP compared to the previously reported 65.9%, due to higher than published public deficits.
Sarr said the troubling data and fear of violating IMF rules are keeping the government from requesting cash from the IMF that could be disbursed in July.
Abdoulaye Ndiaye, a professor of macroeconomics and public finance at New York University’s Stern School of Business, said the audit, unprecedented in Senegal, highlighted the need to make “bold choices.”
“The results are disturbing and a thorough legal investigation is necessary,” he said.
The IMF has already lowered Senegal’s growth forecast for this year and warned of a larger budget deficit due to sluggish income growth.
Earlier this month, Faye called a snap legislative election scheduled for November 17 to try to break the deadlock over a up-to-date budget and efforts to cut government waste.
Nevertheless, nascent oil production, which began in June, and gas production expected by the end of the year could boost state finances.
