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Senegal Borrowing $1 Billion More This Year for Debt in 2024

(Bloomberg) -- Senegal is arranging some of its 2024 financing needs early in order to avoid a potential risk premium that most African borrowers suffer during poll years.

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The country is borrowing 604.8 billion CFA francs ($976 million) more in 2023 for debt service requirements in the first four months of next year, Minister of Finance and Budget Mamadou Moustapha Ba told reporters in the capital, Dakar.

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“We are already mobilizing this,” Ba said. “Access to financial markets is difficult, given the electoral and other imperatives, and the tightening of international financing conditions.”

The country’s dollar bonds maturing in 2048 rose a fourth day by 0.12 cent to 65.64 cents on the dollar at 9:58 a.m. in London. Notes maturing in 2033 advanced 0.1 cent to 78.47 cents on the dollar.

Rising interest rates in developed markets are crowding out borrowers from emerging and frontier markets. Yields on longer-term US Treasuries are reaching highs unseen since before the global financial crisis.

Senegal holds elections in February to replace President Macky Sall, whose second five-year term comes to an end in April. The risk of budget overshooting next year may push Senegal’s lenders to demand higher interest rates if the country waits until early 2024 to raise these loans.

A “good part” of the overfinancing has already been mobilized through syndicated loans on the external market and bond sales on the regional market, Mesmin Koulet-Vickot, the International Monetary Fund’s country representative, said in a text message response to questions. It’s expected to push the West African nation’s debt ratio to 72.2% of gross domestic product this year before easing to 65.6% of GDP in 2024, IMF Mission Chief Edward Gemayel said in an interview in Dakar.

The fund approved a combined $1.8 billion extended credit facility and resilience and sustainability facility for Senegal in June.

The Washington-based lender, which has reached a staff-level pact with Senegal on the first review of the facilities, will disburse about $276 million to the country upon successful review by the executive board of the IMF, it said in a statement.

--With assistance from Momar Niang.

(Updates with bond move in fourth paragraph.)

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