The dismissal of the Senegalese government headed by Prime Minister Ousmane Sonko, a staunch critic of the International Monetary Fund (IMF), by the African country’s president, Bassirou Diomaye Faye, now gives fresh impetus to protracted negotiations aimed at resolving the nation’s debt crisis.
However, analysts and investors cautioned that despite Sonko’s removal, things are still unpredictable, with political uncertainty now emerging as the new complication for the West African country.
“The removal of PM Sonko creates additional political uncertainty. There is also a chance that a newly appointed PM might be in favour of a deep debt restructuring, increasing the probability of a negative outcome for Senegalese bondholders,” said Thalia Petousis, portfolio manager at Allan Grey, while interacting with Reuters.
Faye has already named Ahmadou Al Aminou Lo, a seasoned economist and former regional central bank official, to replace the populist Sonko. Reacting to the developments, on May 26, Senegal’s foreign currency-denominated government bonds plummeted as much as 5.7 cents on the euro and nearly 4 cents on the dollar. As per Morgan Stanley, investors are now pricing higher odds of a debt restructuring following the latest events.
However, Petousis said that only foreign-currency debt would get restructured, not the ones backed by the local currency.
“The risks are that realised haircuts could be steeper than what is currently priced,” the analyst stated further.
Senegalese dollar-denominated bonds have handed investors losses of 9.7% since March 2026, compared to the 0.1% average return of peers in the JPM EMBI Global Diversified Africa index. Bonds due May 2033, on the other hand, traded around 50.6 cents on the dollar, at record lows.
Talking about the Senegal-IMF negotiations, the West African country has been engaged in off-and-on talks to secure a new deal from the global monetary body since the latter froze a USD 1.8 billion programme in 2024 upon the discovery of previously unreported debt that pushed the nation’s debt-to-GDP ratio above 130%.
Senegal right now is locked out of international capital markets and battling a ballooning fuel subsidy bill. Investors are getting anxious about the government’s ability to service its debt obligations.
President Faye’s office said earlier in May that he was personally taking charge of Senegal’s debt file. Cheikh Diba, who had served as finance minister until last week, said that talks with the IMF would resume in the week of June 8, with a deal on the “broad contours of a new programme” possible by the end of June 2026.
However, Sonko, in one of his last acts as the prime minister, lashed out at the IMF, telling lawmakers that it had “never developed a country” and Senegal should rely more on domestic resources than foreign lenders.
Sonko has also been a critic of the government giving in to the pressure of restructuring its debt. Despite being ousted from the PM’s office, he will likely remain an influential political player, as his party PASTEF still dominates the National Assembly.