Moody’s has downgraded Senegal’s credit rating from B1 to B3 due to deteriorating fiscal conditions highlighted in a critical audit. Central government debt is projected at 99.7% of GDP, significantly exceeding prior estimates, and the budget deficit has been re-evaluated to 12.3%. Prime Minister Sonko described the audit findings as catastrophic, prompting plans for financial reforms and a follow-up audit.
Moody’s Investors Service has downgraded Senegal’s credit rating, changing its long-term issuer and foreign-currency senior unsecured ratings from B1 to B3. This adjustment comes in light of a negative outlook associated with weak fiscal conditions and rising debt levels following a state audit criticized by Prime Minister Ousmane Sonko. The audit, deemed ‘catastrophic’, revealed substantial discrepancies in the nation’s financial management, putting Senegal just above a C-level rating indicative of default risk.
The audit report, released by the Senegal Court of Auditors, indicated that central government debt would reach approximately 99.7 percent of GDP in 2023. This figure exceeds government estimates by 25 percent and signals greater vulnerability to economic shocks than previously acknowledged. The court’s findings highlighted poor financial management between 2019 and 2024 and led to reevaluations of the country’s budget deficit.
Prime Minister Sonko expressed concerns about the findings, stating the audit results were ‘particularly catastrophic and concerning’. In response to the audit, he indicated that there would be spending adjustments and a follow-up audit by the end of April. The updated budget deficit for 2023 has been recalculated to approximately 12.3 percent of GDP, a significant increase from the earlier figure of 4.9 percent.
Moody’s highlighted that the downgrade stems from the substantial deterioration of Senegal’s fiscal metrics, thus limiting the country’s fiscal maneuverability and heightening funding requirements. The Court of Auditors also noted serious governance issues, including evidence of mismanagement and potential criminal conduct, with unrecorded expenditures not present in the state’s official accounts. Legal action could follow against those deemed responsible for the irregularities identified in the audit.
In summary, Moody’s downgrade of Senegal’s credit rating reflects severe fiscal challenges revealed in a recent government audit, which exposed significant discrepancies in financial management. The elevated debt levels and mounting budget deficits raise concerns about the nation’s economic stability and governance. The government has pledged to address these issues through spending rationalization and future audits.
Original Source: www.hindustantimes.com
