Senegal’s government has officially launched the clearance of public arrears totaling 1.9 trillion FCFA—equivalent to roughly $2.9 billion—before the close of the fiscal year. The announcement, confirmed by a senior official in the Ministry of Economy, Finance and Planning, prioritizes payments to small and medium enterprises (SMEs) that have long awaited settlement. While the technical details of the process remain under wraps, the move arrives amid a tightening fiscal environment for Dakar.

Why 1.9 trillion FCFA matters for Senegal’s economy

The staggering figure represents nearly 10% of Senegal’s projected 2024 GDP of 19 trillion FCFA. It reflects years of unpaid government invoices, delayed public contract settlements and unresolved tax credits owed to suppliers across the country. Key questions remain unanswered: How much is domestic versus foreign debt? How many businesses will be covered in the initial phase? What criteria will determine eligibility? Public disclosures have yet to provide clarity on these critical points, leaving stakeholders in the dark about the full scope of the operation.

The lack of transparency has intensified concerns among business leaders. According to Senegal’s leading employer associations, including the National Council of Employers (CNP) and the National Confederation of Senegalese Employers (CNES), over 60% of SMEs in sectors like construction, IT services and administrative supplies rely heavily on government contracts. Since late 2023, delayed payments have triggered a wave of insolvencies, layoffs and a sharp contraction in bank lending to government suppliers.

From hidden debts to fiscal reckoning

The clearance initiative cannot be separated from a February 2025 report by Senegal’s Court of Auditors, which revised upward the nation’s inherited debt figures by identifying hundreds of billions in unrecorded liabilities. The revelation prompted the International Monetary Fund (IMF) to halt its ongoing program and demand a comprehensive audit before releasing additional funds. Negotiations for a new IMF facility remain ongoing, with the resolution of domestic arrears—often called domestic arrears—positioned as a non-negotiable performance benchmark alongside wage mass control and primary balance targets.

Donors, led by the IMF, now view Senegal’s plan through a strict lens of credibility. A transparent payment schedule, backed by verifiable sources such as direct cash releases, sovereign bond issuance or tax offsets, will be essential to unlocking fresh financial support and restoring investor confidence.

Can Dakar follow West Africa’s lead?

Senegal is not the first country in the region to confront this challenge. Côte d’Ivoire settled around 800 billion FCFA in domestic arrears between 2012 and 2015 using a mix of direct payments and the issuance of publicly traded debt instruments on the West African Monetary Union market. Benin adopted a similar approach in 2019, targeting local suppliers and restoring business confidence before accelerating private investment.

For President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko, sworn in April 2024 on a platform of fiscal transparency and reform, the clearance deadline represents both a financial and political test. Meeting the 2024 target would send a strong signal to the private sector after 18 months of declining public orders and downgraded growth forecasts. Yet the path forward remains uncertain.

The mechanics of funding raise questions. Senegal’s regional bond market has seen rising yields, with Treasury issuances in 2025 commanding rates above 8%. Authorities must now balance the cost of additional borrowing, staggered repayments and tax compensation to ensure the clearance delivers tangible relief to creditor SMEs rather than simply compounding an already strained fiscal equation.

What’s next for Senegal’s SMEs

The coming months will determine whether the clearance plan translates into real liquidity for local businesses or becomes another chapter in a longer struggle to restore fiscal health and private sector trust.

By Yacouba Ouédraogo — Journalist