Debt Suspended but not cancelled! The Minister of Finance and Budget, Abdoulaye Daouda Diallo, and the Ambassador of France to Senegal, Philippe Lalliot, signed an agreement suspending debt service in the amount of FCFA 13.7 billion for the period from January to June 2021. This agreement, signed on Friday, June 25, 2021 between Paris and Dakar, is part of the Debt Service Suspension Initiative (DSI) initiated by official bilateral creditors, with the support of the IMF and the World Bank. The goal is to support states to remain economically upright in the face of the impact of Covid-19, especially for developing countries.
Senegal obtained the suspension of its debt for the period from January to June 2021 on Friday 25 June. The Minister of Finance and Budget, Abdoulaye Daouda Diallo, and the Ambassador of France to Senegal, Philippe Lalliot, concluded the agreement for the sum of 13.7 billion FCFA. “On Friday, 25 June 2021, Senegal and France concluded a second agreement under the Debt Service Suspension Initiative (DSSI) launched since 2020 by G20 member countries and coordinated by the Paris Club”,” said the Department of Finance in a news release.
This agreement will cover the period from January to June 2021. Minister Abdoulaye Daouda Diallo said that this privilege granted to Senegal reflects the good relations between Paris and Dakar. Indeed, Senegal had already obtained a suspension of debt service for the period from May to December 2020 for an amount of FCFA 18.6 billion. “In combination, since the launch of the ISSD in May 2020, the total amount of debt due that has been suspended between Senegal and France is 32.3 billion CFA francs,” the minister recalled.
Senegal intends to use the resources derived from this agreement in other health, social and economic spending to combat the effects of the pandemic and contribute to the recovery of its economy, according to the statement.
Note that this is not a cancellation of the debt but just a suspension forfeitures for a specific period. Senegal will have to continue to pay its debt until the end.