Senegal has defended its use of complex financial deals to raise money more cheaply, after scrutiny over transactions that helped it secure hundreds of millions of dollars outside global debt markets.

Senegal used complex swap deals to borrow at lower interest rates than global markets.The move comes after it lost access to international markets following IMF concerns over hidden debt.While the government says it saved money, investors worry about transparency and risks.The IMF may treat the deals as external debt, raising concerns for future restructuring.

The government said it used total return swaps (TRS) to cut borrowing costs at a time when it has been locked out of international bond markets and is trying to rebuild trust with investors.

Finance minister Cheikh Diba said the country borrowed at around 7 per cent using the structure, compared with 11 to 12 per cent in Eurobond markets.

“The instrument allows the country to borrow at significantly lower cost than international markets,” he said, adding that the savings reached about 36 billion CFA francs ($64 million).

The defence follows reports that Senegal raised about €650 million through deals with lenders including Africa Finance Corporation and First Abu Dhabi Bank, using local-currency bonds as backing.

The finance ministry said the transactions were part of a strategy to widen funding sources in a tough global environment, insisting there was no attempt to hide the borrowing.

Pressure after IMF setback

Senegal has been under growing financial strain since the International Monetary Fund froze a $1.8 billion programme in 2024 after previously undisclosed debt was uncovered.

The loss of IMF support shut the country out of international capital markets, forcing it to rely more on regional borrowing and alternative financing tools.

Between April and November 2025, Senegal carried out seven swap transactions, according to the finance ministry.

Concerns over transparency and risk

Despite the government’s defence, investors and the IMF have raised concerns about the lack of full disclosure and the risks tied to such instruments.

Total return swaps involve pledging bonds in exchange for cash, but they can complicate debt restructuring because it is unclear how they are classified.

The IMF said it had been informed about the swaps but had not received full details.

“Such total return swaps would be considered as external debt for the purpose of the Fund’s debt sustainability analyses,” a spokesperson said.

Some investors also worry the structure could favour new lenders over existing bondholders if Senegal defaults, a claim the government denies.

Trend

Senegal’s approach reflects a wider shift among cash-strapped economies facing high global interest rates.

Countries such as Angola have also turned to similar swap-based financing, raising funds while avoiding expensive international markets.

While the strategy can reduce costs in the short term, analysts warn it could increase risks if debt problems worsen.

For Senegal, restoring investor confidence and securing a new IMF programme remain key to regaining access to global markets.