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Senegal is expected to appoint global investment bank Lazard as a financial adviser on sovereign debt matters, signalling continued efforts to restore fiscal stability and secure fresh international financing as the country grapples with mounting debt pressures.
Senegal is expected to appoint global financial advisory firm Lazard as its adviser on sovereign debt matters, according to sources familiar with the discussions, as the West African nation seeks to reinforce its public finances amid growing fiscal challenges.
The anticipated appointment comes as investors closely monitor Senegal’s efforts to restore confidence following the disclosure in 2024 of more than US$13 billion in previously unreported public debt—equivalent to more than one-quarter of the country’s gross domestic product (GDP).
Although the selection of a financial adviser does not necessarily indicate that a debt restructuring is imminent, such appointments are often viewed as an important preparatory step for potential discussions with creditors and international financial institutions.
Neither Lazard nor Senegal’s Ministry of Finance commented on the reported appointment.
Supporting Fiscal Recovery
According to sources, Lazard is expected to work alongside Global Sovereign Advisory (GSA), the Paris-based advisory firm that Senegal appointed in November to support the government’s financial strategy.
The move forms part of Senegal’s broader efforts to stabilise its public finances and rebuild investor confidence after the revelation of previously unreported liabilities significantly altered the country’s debt outlook.
IMF Programme Remains a Priority
Senegal has been negotiating a new programme with the International Monetary Fund (IMF) after the Fund suspended an earlier US$1.8 billion lending arrangement following the discovery of the undisclosed debt.
To secure fresh IMF financing, Senegal must demonstrate that its public debt is sustainable over the medium term.
An agreement with the IMF is widely regarded as critical because it would not only provide financial support but also strengthen confidence among international investors and development partners, potentially unlocking additional external financing.
Financing Challenges Persist
The government has repeatedly stated that it does not intend to pursue a sovereign debt restructuring.
Instead, Senegal has continued to rely primarily on regional capital markets to finance its budget.
However, borrowing costs remain elevated, while access to international capital markets has become increasingly limited.
At the same time, the country’s financing requirements continue to grow.
Some investors now believe that debt restructuring may eventually become unavoidable.
Analysts at Citi said in a research note that, assuming Senegal remains committed to reaching an IMF-supported programme, debt renegotiation has become their central expectation.
They added that a restructuring scenario could require significant reductions in the nominal value of external debt obligations.
Reflecting these concerns, Senegal’s international euro- and U.S. dollar-denominated sovereign bonds continue to trade at distressed levels, with many issues changing hands at between 52 and 58 cents on the dollar or euro, indicating continued investor caution regarding the country’s debt outlook.
Senegal has long been regarded as one of West Africa’s more stable economies, making developments in its public finances particularly significant for regional investors and international lenders. Securing a new IMF programme and restoring confidence in debt sustainability will be critical to maintaining access to external financing, supporting infrastructure investment and preserving macroeconomic stability. The appointment of an experienced financial adviser could help strengthen negotiations with creditors and guide the country’s longer-term fiscal recovery strategy.
Source: Reuters
Reporting: Karin Strohecker and Portia Crowe.
Editing: Jan Harvey, Libby George and William Maclean.