PREVIEW
Two resource-based economies are being held back by legacies of mismanaged debt
The governments in Dakar and Maputo are playing ‘wait and see’ with the IMF as they work out the parameters of new borrowing and economic reform programmes with the Fund.
Vera Martin, the IMF’s new mission chief, is due in Senegal for several days this week, though officials say that no negotiations will take place. Prime Minister Ousmane Sonko has repeatedly insisted that his government would not seek to restructure its debts and would be able to fund its repayments.
Dakar’s access to a US$1.8 billion loan facility was frozen by the IMF last year following the discovery of more than $7bn of hidden liabilities left by ex-president Macky Sall’s government (Dispatches, 10/11/25, Loan talks drag on).
The hidden debts, plus Senegal’s reliance on more expensive regional debt auctions after losing access to IMF funding, pushed its debt burden to 132% of GDP by the end of 2025. Treasury officials in Dakar forecast that debt servicing costs would increase by $1bn in 2026 (Dispatches, 27/10/25, Hidden loans ramp up debt servicing costs).
In Maputo, President Daniel Chapo is less bullish than Sonko. He says that talks with creditors on a possible debt restructuring deal can start only after striking a new agreement with the Fund. On 14 January, Chapo said that a March staff visit by the IMF could produce an agreement.
Last November, the IMF warned of Mozambique’s acute financing challenges, and recommended public spending cuts and boosting tax revenues. Battered by serial corruption scandals over the past 20 years as well as an insurgency in the gas-rich province of Cabo Delgado, Maputo’s economy is weaker than Senegal. Chapo’s officials have hired New York-based management consultants Alvarez & Marsal to advise on debt restructuring. The World Bank forecast GDP growth of 1.1% in Mozambique this year but analysts expect this to be revised down in the coming weeks.
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