Moody’s has downgraded Senegal’s credit rating to B3 due to concerns over its fiscal and debt health, following a government audit labeled as “catastrophic” by the Prime Minister. The audit revealed a projected debt of 99.7% of GDP and severe mismanagement of public finances from 2019 to 2024. Legal actions against responsible officials are under consideration, as the government prepares for financial reforms and further audits.
Moody’s Investors Service has announced the downgrading of Senegal’s long-term issuer and foreign-currency senior unsecured ratings from B1 to B3, adjusting the outlook to negative. This decision follows the release of a government audit, which the Prime Minister described as “catastrophic.” The audit revealed a significant deterioration in Senegal’s fiscal position, prompting concerns regarding the country’s economic stability and governance practices.
The new audit estimates that Senegal’s central government debt will reach 99.7 percent of GDP for 2023, exceeding prior calculations by 25 percent. Moody’s expressed that the country is now more susceptible to economic shocks due to its precarious fiscal and debt situation, which complicates efforts to stabilize the economy. The fiscal consolidation process is expected to be particularly challenging given the findings from the audit.
A report from the Senegal Court of Audit has detailed severe financial mismanagement by the government during the period from 2019 to 2024, discrediting previous official financial data under former President Macky Sall. The recalibrated budget deficit for 2023, revealed in this audit, marks an alarming increase from an initially reported 4.9 percent to 12.3 percent of GDP.
Prime Minister Ousmane Sonko characterized the auditors’ findings as “particularly catastrophic and concerning,” leading to the announcement of measures for spending rationalization and a commitment to conduct a new audit by the end of April. Moody’s had already made a rating adjustment in early October, moving Senegal to a “highly speculative” category due to weakening financial metrics.
The independent Court of Auditors has underscored the extent of financial governance issues within the country, highlighting significant discrepancies and instances of large-scale mismanagement that could constitute criminal offenses. The government is now faced with the possibility of legal action against individuals responsible for these financial failings, indicating a serious intent to address these issues immediately.
In summary, Moody’s recent downgrade of Senegal’s credit rating reflects significant concerns about the country’s fiscal health and governance, following a devastating audit. The elevated levels of debt and poor financial management underline the urgent need for economic reforms and accountability in governance. As the government anticipates corrective measures, the implications of these findings will likely resonate across Senegal’s economic landscape.
Original Source: www.hindustantimes.com
