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S&P Global Ratings lowers Senegal's outlook to stable

S&P Global Ratings revised its outlook on Senegal to stable from positive, saying the country's general government debt-to-GDP ratio would rise more than previously projected.

Senegal's government debt is now forecast to reach 56% of GDP at end-2019, or 8 percentage points higher than previous expectations, said S&P Global Ratings, which affirmed the country's long and short-term foreign and local currency sovereign credit ratings at B+/B.

The increase in government debt would make Senegal vulnerable to potential funding shocks, the rating agency said.

S&P Global Ratings expects Senegal's annual net government borrowing, which has consistently exceeded the headline fiscal deficit since 2014, to average more than 4.5% of GDP in 2019-2021, after reaching an all-time high of 9.7% in 2018.

The rating agency warned that Senegal's economic expansion has become too dependent on public borrowing in foreign currency. It projected the country's GDP growth to average 6% to 7% by 2021, up from an average of 6.7% in 2015-2018 and an average of about 3.5% in 2011-2014.

Senegal's foreign direct investment remains low at 2% to 3% of GDP, the rating agency said, partly due to high energy costs. Private investment in services, tourism, and mining is expected to pick up over the next five years as business conditions improve, the agency added.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.