Beyond Betrayal and Courage: A Governance Break?
The dismissal of Ousmane Sonko immediately fuelled two symmetrical narratives in Senegalese and West African public discourse. For some, Bassirou Diomaye Faye betrayed the 2024 electoral promise and broke a foundational political pact. For others, he acted with courage by assuming sole responsibility for the executive in the face of an unmanageable cohabitation. These two interpretations, however understandable, miss the essential point.
What unfolded at the top of the Senegalese state is not merely a question of loyalty between two men. It is a collision between two political temporalities and two incompatible readings of the real constraints of power.
To govern Senegal in 2025 and 2026 is to inherit public debt exceeding 130% of GDP, a budget deficit of 6%, and a downgraded sovereign credit profile on international markets. In this context, the state has no ideological room for manoeuvre. It needs external financing, and such financing necessarily passes through multilateral institutions and investor confidence. This is not a matter of political conviction: it is an arithmetic constraint.
Sonko knew it. Faye knew it. Faced with ground realities, should they admit it? Would that not be an admission of failure and a loss of their electoral base, potentially even triggering popular unrest? Sonko had built his political capital on resistance to external injunctions and a frontal critique of the IMF. Reversing this line without losing face was structurally impossible for him. Faye, meanwhile, was within the state apparatus, confronted with real fiscal data, repayment deadlines, and negotiations with Bretton Woods institutions. He had no choice but to move forward.
What remains after this sequence is a form of paralysis weighing on the governance tempo at a moment when Senegal cannot afford hesitation. The reforms personally driven by Sonko particularly the renegotiation of contracts in the mining, oil, and water sectors are now suspended pending questions about their continuity under a new government. This is where tension at the top of the state ceases to be a palace affair and becomes a concrete issue for ordinary Senegalese citizens.
An Economic Context That Amplifies the Cost of Political Crisis
Political crises never carry the same cost depending on when they occur. The one Senegal is experiencing today comes at a particularly unfavourable moment, when the state’s margins for manoeuvre are narrow and every signal of instability translates almost immediately into measurable financial costs.
Senegal enters this governmental transition with public debt exceeding 130% of GDP, a budget deficit of 6%, and a projected path back to 3% by 2027. Concretely, this means the state is devoting an increasing share of fiscal revenues to debt servicing rather than social spending and infrastructure. In June 2026, the country will have to meet significant obligations on the WAEMU sovereign bond market, in an environment where every signal of political instability mechanically increases refinancing costs. Sovereign credit ratings are not an academic exercise: they are a confidence thermometer determining the conditions under which a state can borrow to finance public policy.
What worsens the situation is that the political crisis occurs precisely when the Senegalese private sector is already extremely fragile. State payment delays are extending beyond reasonable thresholds. Credit lines are tightening. SMEs have been waiting for months for settlement of completed public contracts, forcing some to reduce staff and others to sell assets to meet their obligations. What official statistics do not yet show, company balance sheets already reflect. And when the private sector weakens, employment, youth training, and value creation decline that is, the material conditions of everyday life.
To this internal fragility are added external factors beyond Senegal’s control. Geopolitical tensions between Iran and the United States are keeping global oil prices high. Some argue that Nigeria supplies oil to African countries, while ignoring the existence of an international pricing platform that adjusts petroleum prices according to global conditions. For a country that still imports most of its energy needs despite the entry into production of Sangomar and GTA projects, this increase directly affects import bills, transport costs, and consumer prices.
The Sonko government had introduced several measures to contain the cost of living: reductions in the prices of rice, oil, fuel, and electricity. Their continuity under the new government is not guaranteed, particularly if an IMF agreement requires subsidy reductions as a programme condition. It is precisely this link between political crisis at the top and household purchasing power that public debate should focus on.
Many observers presented Sonko’s dismissal as a “normalisation” signal that could facilitate IMF negotiations. Yet Senegalese Eurobonds fell, and Morgan Stanley warned on 26 May that the sovereign curve could underperform by an additional 3 to 4 points. The decline in Senegalese bonds is not a vote against Sonko or against Lo. It is, above all, a vote against uncertainty.
The market interpreted the dismissal as a signal that the debt crisis was entering a new phase potentially more decisive, but also more unpredictable. The appointment of Lo sent a message of technocratic seriousness and openness to creditors, but also reinforced the perception that difficult fiscal measures and even debt restructuring are now more likely.
In the short term, the fall in sovereign bonds and the rise in perceived country risk may have very concrete consequences for households, even if not immediately visible. When investors demand higher interest rates to lend to the Senegalese state, local banks and companies also face higher financing costs, which translates into rising consumer prices.
The IMF File: Turning Point or Illusion?
Ousmane Sonko had consistently positioned himself as a critic of the International Monetary Fund, even after taking office. His independence-oriented economic line contributed to the suspension of disbursements for more than a year. His departure mechanically opens the way to a normalisation of discussions. Signals are already visible: the meeting between Diomaye and IMF Managing Director Kristalina Georgieva at the Africa Forward forum in Nairobi, the statement by Finance Minister Cheikh Diba before the National Assembly indicating improving discussions, and new working sessions scheduled from 8 June 2026.
But a return to the IMF is not a neutral solution. It comes with conditionalities whose social cost is real: fiscal adjustment, structural reforms, pressure on subsidies. For the most vulnerable populations those who depend precisely on purchasing-power support mechanisms introduced by the previous government these conditionalities may translate into a deterioration of daily life at the very moment the agreement is presented as macroeconomic good news. Navigating between external credibility and internal social protection will be the first test of the Lo government.
Such a return would certainly send a positive signal to international creditors by restoring a framework of fiscal discipline, public finance transparency, and reform monitoring. It could also help restore investor confidence, facilitate access to external financing, and gradually reduce borrowing costs.
In Senegal, IMF conditionalities may include reductions in energy subsidies, containment of the public wage bill, increases in certain tax revenues, and rationalisation of state spending. While effective from a fiscal standpoint, these measures risk increasing the cost of living, raising electricity and fuel prices, slowing public sector recruitment, and increasing pressure on low-income households. In the short term, ordinary Senegalese citizens may therefore experience more sacrifices than benefits.
The real question for Senegal is therefore not only to restore an IMF agreement, but to negotiate a programme capable of balancing fiscal consolidation, social protection, and productive investment in agriculture, industry, education, and health. Without this balance, market confidence may be restored while social discontent increases, ultimately undermining political stability and the sustainability of reforms.
Scenarios: Institutional and Financial Trajectories
Scenario 1: Strategic Separation Holds
Diomaye governs with Lo as Prime Minister, an IMF agreement is reached within weeks, and markets gradually stabilise. Sonko, from Parliament, maintains his popular capital without blocking fiscal balance, aware that his 2029 credibility depends on appearing as an alternative rather than a saboteur. This is the least costly scenario in the short term for populations, but it implies fiscal adjustments that will be felt in subsidies and social spending.
Market validation of this scenario would be measured through several financial indicators. The first signal would be a significant narrowing of spreads on Senegalese Eurobonds, reflecting a decline in risk premium and a rebound in bond prices. On the WAEMU regional market, improved Treasury financing conditions higher subscription rates, longer maturities, and lower yields would also signal renewed confidence. Rating agencies could shift outlooks from negative to stable. Local currency ratings, often more resilient due to WAEMU membership and BCEAO support, would also be monitored. Finally, increased FDI flows and multilateral disbursements would confirm market acceptance of the new institutional configuration.
However, even in this favourable scenario, investors will continue to monitor the government’s ability to implement fiscal adjustments without triggering social tensions, as financial credibility depends as much on political stability as on macroeconomic indicators.
Scenario 2: Conflictual Cohabitation
Sonko returns to his parliamentary seat, making legislative votes unpredictable. Mining and oil contract reforms are abandoned or suspended. Parliamentary blockage becomes not just a political crisis but a chain reaction for the real economy. By paralysing a credible supplementary budget, it sends a negative signal to creditors and the IMF, raising doubts about the state’s ability to implement promised fiscal adjustments. Rating agencies would downgrade not only financial indicators but institutional capacity itself, pushing up borrowing costs.
Higher sovereign yields would spill over into the banking system. Faced with higher refinancing costs, banks would prioritise government securities over private sector lending, creating a crowding-out effect.
Scenario 3: Durable Instability
The parliamentary majority fragments, IMF negotiations stall, risk premiums remain high, and foreign direct investment is put on hold for Sangomar and GTA projects. Fragmentation would be gradual, not sudden, as deputies split between loyalties to Sonko and Diomaye. The result would be a nominal majority that is no longer operational, making policy unpredictable a scenario most heavily penalised by markets.
A hidden debt revelation pushing debt to 132% of GDP would trigger a major confidence crisis and a freeze of the IMF programme. Eurobonds would face sustained pressure, with yields 100 - 300 basis points above stabilised trajectories. Refinancing pressures could significantly increase debt servicing costs. Growth forecasts would fall to 2.2%, despite oil production expectations. The government’s Economic and Social Recovery Plan would aim to mobilise CFAF 5,667 billion (2025–2028), but fiscal constraints would limit public investment. Banks would tighten lending conditions, increasing interest rates by 1 - 3 percentage points.
Conclusion
The real cost of uncertainty is not confined to bond markets. It spreads across the entire economy. The political equation has become radically more complex following Sonko’s election as Speaker of the National Assembly by 132 votes out of 165, just four days after his dismissal as Prime Minister.
But ordinary Senegalese citizens are waiting to know whether the promises of 2024 economic sovereignty, controlled cost of living, oil windfalls for all will survive the rupture at the top. The next 90 days will be decisive: they will determine whether the Lo government can reassure markets without sacrificing social gains, whether Sonko chooses the role of alternative power or obstruction, and whether Senegal can transform a governance crisis into a catalyst for institutional discipline.
This sequence reveals a structural truth well known in West Africa: political transitions built on personal coalitions without strong institutional architecture inevitably produce, sooner or later, this kind of paralysis. Electoral promises must be made with moderation, because ground realities always diverge from theory.