Senegal has justified its reliance on sophisticated financial arrangements to access cheaper funding, following scrutiny over transactions that enabled it to raise hundreds of millions of dollars outside traditional global debt markets.
Officials explained that the government adopted total return swaps (TRS) to reduce borrowing costs while being shut out of international bond markets and working to restore investor confidence.
Finance Minister Cheikh Diba noted that the country secured financing at roughly 7%, compared to the 11–12% rates typically seen in Eurobond markets.
He emphasized that the approach allows Senegal to obtain funds at far lower costs than those available on international markets, adding that the strategy saved about 36 billion CFA francs (around $64 million).
The explanation comes after reports that Senegal raised approximately €650 million through agreements with lenders such as Africa Finance Corporation and First Abu Dhabi Bank, using local-currency bonds as collateral.
According to the finance ministry, these deals form part of a broader plan to diversify funding sources amid a challenging global financial climate, stressing that there was no intention to conceal the borrowing.
Financial pressures have intensified since the International Monetary Fund halted a $1.8 billion programme in 2024 after previously undisclosed debt came to light.
The suspension of IMF support effectively cut Senegal off from international capital markets, pushing the country to depend more heavily on regional financing and alternative funding mechanisms.