Moody’s has downgraded Senegal’s credit rating to B3, citing weak fiscal conditions and a concerning debt outlook. The recent audit revealed extensive financial mismanagement and inflated budget deficits. Prime Minister Ousmane Sonko described the audit results as catastrophic, prompting the government to reconsider its financial policies.
Moody’s Investors Service announced on Monday that it has downgraded Senegal’s long-term issuer and foreign-currency senior unsecured ratings from B1 to B3, revising the outlook to negative. This decision was based on the results of a government audit, which the Prime Minister described as ‘catastrophic’ due to weak fiscal health and concerning public debt levels.
The recent assessment indicates that Senegal’s central government debt is projected to reach 99.7 percent of GDP in 2023, significantly higher than prior estimates, illustrating greater vulnerability to potential economic shocks. Moody’s expressed concern that Senegal’s fiscal and debt situation will hinder efforts at fiscal consolidation.
The Senegal Court of Audit revealed extensive financial mismanagement during the period from 2019 to 2024, invalidating information that had been previously reported under former President Macky Sall. Notably, the recalculation of the 2023 budget deficit demonstrates an increase from 4.9 percent to 12.3 percent of GDP.
Prime Minister Ousmane Sonko conveyed the audit results to lawmakers, stating that the findings were ‘particularly catastrophic and concerning.’ He indicated that the government would undertake spending rationalization and conduct another audit by the end of April.
Earlier, in October, Moody’s had already downgraded Senegal from Ba3 to B1, categorizing it as a ‘highly speculative’ risk. The current downgrade stems from the serious financial discrepancies highlighted by the government auditors, which have restricted Senegal’s fiscal space and increased funding needs.
The Court of Audit provided evidence of substantial financial mismanagement, which may involve criminal offenses and significant unaccounted expenditures. The government has indicated that legal actions may be initiated against individuals responsible for these failings, emphasizing the seriousness of the findings.
In conclusion, Moody’s downgrade of Senegal’s credit rating reflects substantial weaknesses in the country’s fiscal management and rising debt levels. The recent audit findings, labeled catastrophic by the Prime Minister, underscore serious governance issues that have led to widespread financial discrepancies. The government plans to implement measures to address these challenges and reassess its financial strategies going forward.
Original Source: www.hindustantimes.com
