The DSA presented in this document is based on the Debt Sustainability Framework (DSF) for low-income countries (LICs). See “Debt Sustainability in Low-Income Countries—Proposal for an Operational Framework and Policy Implications” and “Debt Sustainability in Low-Income Countries—Further Considerations on an Operational Framework and Policy Implications.”
See “Staff Report for the 2012 Article IV Consultation, Fourth Review Under the Policy Support Instrument, and Request for Modification of an Assessment Criterion—Debt Sustainability Analysis” for a more complete discussion of the macroeconomic assumptions in the DSA.
The authorities plan to obtain technical assistance from IDA to help them prepare for raising financing from international capital markets.
Both ratios should be measured on a backward-looking, three-year average basis.
As noted in the previous DSA, the exchange rate shock is arguably overstated in the case of Senegal in light of the peg to the euro, which is guaranteed by the French Treasury, and the relatively large percentage of Senegal’s public external debt stock denominated in euro and SDR (which is partially linked to the euro).
The authorities were initially planning to issue CFAF 538 billion on the regional market in 2013, with an average maturity at issuance of about 1.5 years. With the 10-year Eurobond expected to substitute for CFAF 145 billion and the remaining CFAF 393 billion issued on the market expected to have an average maturity at issuance of about 2 years, the average maturity of the whole CFAF 538 billion would increase by about 2 years. The current yields on short-term local currency debt and the 2011 Eurobond are comparable, at about 5.5 percent. Issuing in US dollars, however, increases the exchange rate risk.
See Revisiting the Debt Sustainability Framework for Low-Income Countries for a discussion of public debt benchmarks. Senegal’s three-year average CPIA score is 3.71, which places the country at the upper end of the medium policy performance category. Senegal’s CPIA score has increased every year since 2008.