By Duncan Miriri
NAIROBI (Reuters) -Senegal’s sovereign greenback bonds fell on Friday after a authorities audit revealed bigger debt and deficit figures than the earlier administration had reported, Tradeweb knowledge confirmed.
Lately elected President Bassirou Diomaye Faye, who ordered the audit, blamed the earlier authorities for releasing false figures, but it surely underscored the daunting process forward for the West African nation already grappling with slower financial progress.
“The announcement does sound like a credit-negative occasion,” mentioned Evghenia Sleptsova, senior rising markets economist at consultancy Oxford Economics.
The greenback bonds fell by greater than 2 cents in early buying and selling earlier than retracing the losses to bid roughly 1.3 cents decrease between 73.01-85.52 cents on the greenback by 1200 GMT.
The Worldwide Financial Fund, which has $1.9 billion bailout programme with Senegal, mentioned the federal government had shared preliminary audit findings and that it was working with them to find out acceptable subsequent steps.
The audit confirmed a greater than 10% deficit on the finish of 2023, in distinction with the roughly 5% reported by the earlier authorities, financial system minister Abdourahmane Sarr mentioned late on Thursday.
Public debt, in the meantime, averaged 76.3% of GDP, in response to the audit, in contrast with the beforehand reported 65.9%, because of higher-than-published public deficits.
Sarr mentioned the regarding figures, and worry of operating afoul of IMF guidelines, saved the federal government from requesting IMF money that would have been disbursed in July.
Abdoulaye Ndiaye, professor of macroeconomics and public finance at New York College’s Stern Faculty of Enterprise, mentioned the audit, unprecedented in Senegal, underscored the necessity for “brave decisions.”
“The outcomes are troubling, and there must be an intensive authorized investigation,” he mentioned.
The IMF had already lowered Senegal’s progress forecast for this yr, and warned of a wider fiscal deficit because of gradual income progress.
Earlier this month, Faye known as a snap legislative election, scheduled for Nov. 17, to attempt to break impasse over a brand new finances and efforts to chop authorities waste.
Nonetheless, nascent oil manufacturing, which started in June, and fuel output anticipated by the top of the yr, might enhance authorities funds.