Senegal could be heading toward an external debt restructuring as early as the second half of 2026, according to a new assessment by Bank of America (BoFA) Global Research. In a note released on Thursday, the bank said a debt moratorium and restructuring talks with creditors are becoming “increasingly likely,” as the West African nation grapples with serious fiscal pressures.
The warning comes as Senegal struggles to manage billions of dollars in previously undisclosed debt accumulated under the former administration. These hidden liabilities have complicated the country’s public finances and slowed progress in negotiations with the International Monetary Fund (IMF), where Senegal is seeking a new lending programme to help stabilise its economy and restore investor confidence.
Bank of America said both an external debt moratorium and restructuring negotiations could begin in the latter half of 2026, alongside further efforts by the government to reprofile its domestic debt. Despite the challenges, the bank noted that Senegal’s local debt market has shown relative resilience, which may influence how authorities approach the restructuring process.
“Given the resiliency of the local market, a moratorium on external debt and subsequent restructuring negotiations appears most likely in late 2026,” the note stated.
BoFA also estimated a current recovery value for Senegal’s external debt in the “40s,” assuming an exit yield of around 11%. This suggests that investors could face significant losses if a restructuring proceeds, though the exact impact would depend on the final terms of any agreement with creditors and international lenders.
Senegal, long viewed as one of West Africa’s more stable economies, has been under growing pressure in recent months as higher global interest rates, rising debt-servicing costs and weaker government revenues have strained its budget. The outcome of its ongoing discussions with the IMF is expected to play a critical role in determining whether the country can avoid more severe financial measures in the near future.
Source:Africa Publicity
