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Senegal’s Prime Minister Ousmane Sonko has launched a sweeping tax reform agenda aimed at reducing the country’s long-standing dependence on the International Monetary Fund (IMF). In a bold and nationally resonant move, Sonko is shifting Senegal’s fiscal strategy away from external borrowing toward self-reliance, placing domestic resource mobilization at the heart of his government’s economic agenda.
The announcement comes amid ongoing uncertainty about Senegal’s financial standing with the IMF. In 2024, the IMF suspended disbursements to the country after uncovering significant discrepancies in reported budget deficits and debt levels under the previous administration. This suspension blocked the flow of approximately 250 billion CFA francs (about $438 million) in annual funding, forcing Senegal to seek alternative means to finance its development programs.
“We must reclaim our sovereignty—not just politically, but economically,” Sonko said during a press conference in Dakar. “The era of signing deals we can’t control must end. The Senegalese people deserve a system where our taxes not loans, fund our development.”
A Shift in Strategy
Rather than increasing tax rates a politically risky move Sonko’s administration is focused on enhancing tax collection efficiency, plugging loopholes, and broadening the tax base. Key elements of the plan include:
• Taxpayer Registry Expansion: The government is integrating data from utility providers, property registries, and mobile operators to identify and register new taxpayers, especially in the informal sector, which accounts for over 40% of GDP.
• Curtailing Tax Exemptions: Sonko has ordered a review of all tax exemptions, including those granted to multinationals and foreign investors, which he described as “costly and often unproductive.”
• Digitalization of Tax Services: A new digital platform—SEN’FINANCES—will allow individuals and businesses to file taxes, track payments, and receive automatic reminders. The platform is also integrated with customs and value-added tax systems, allowing for a more comprehensive fiscal overview.
• Renegotiation of Tax Treaties: The administration has begun reviewing over 20 bilateral tax treaties with foreign countries, some of which have enabled profit-shifting and base erosion. Corporate tax rates for large firms are expected to rise from an average of 18% to at least 20%, in line with regional standards.
• Third-Party Auditing and Transparency Measures: The Finance Ministry is collaborating with civil society groups and independent auditors to improve public trust and reduce corruption in tax administration.
IMF Relations: A Fragile Balance
The IMF has responded cautiously but positively to Sonko’s reforms. While it continues to withhold fresh disbursements pending a full audit of past misreporting, the Fund has welcomed Senegal’s efforts to improve fiscal discipline and strengthen domestic revenue systems.
“Enhancing domestic revenue mobilization is critical for Senegal’s medium-term stability,” said an IMF representative in West Africa. “We encourage continued progress in transparency, data accuracy, and inclusive governance.”
However, the IMF warned that domestic reforms alone won’t be enough. Without spending control and credible fiscal projections, Senegal risks repeating past mistakes even with higher tax revenues.
Filling the Gap
To make up for the shortfall left by suspended IMF funds, Senegal has already turned to regional capital markets. In the first quarter of 2025, the country successfully raised 405 billion CFA francs (approximately $709 million) through a bond issuance on the West African Economic and Monetary Union (WAEMU) market.
These funds, while helpful, come at higher interest rates than IMF loans and are seen as a temporary fix rather than a sustainable strategy. Sonko has acknowledged this risk but insists that greater fiscal independence is worth the cost.
“We would rather pay a fair price on the open market than compromise our sovereignty,” he stated in a speech to the National Assembly.
Public Support and Political Risks
Sonko’s reforms have found support among many Senegalese citizens, particularly youth and civil society leaders who have long criticized the country’s reliance on Western institutions. His nationalist rhetoric backed by concrete policy steps has energized a new generation of political engagement.
Still, the reforms are not without risks. Business leaders and foreign investors have expressed concern about the sudden review of long-standing tax exemptions, warning it may discourage investment. In response, the government has promised transparency, consultation, and phased implementation to avoid economic disruption.
Moreover, implementing these reforms will require significant administrative capacity and political will. Senegal’s tax system has long been plagued by inefficiencies, resistance to change, and allegations of corruption. Experts warn that without rigorous oversight, the reforms could lose momentum or be captured by entrenched interests.
Long-Term Vision
Despite the challenges, Sonko’s long-term vision is clear: a Senegal that finances its own development through fair, efficient, and transparent taxation without depending on international lenders. His administration has set an ambitious target to raise the country’s tax-to-GDP ratio from its current 16% to at least 20% by 2027.
“We are not against the IMF,” Sonko clarified. “But Senegal must be a country that chooses its path, not one that is dictated to.”
As his government prepares for the next IMF review, all eyes are on whether Sonko can deliver not just political promises, but tangible fiscal transformation. If successful, Senegal’s approach could inspire a new economic paradigm in Africa one rooted in sovereignty, sustainability, and systemic reform.
