Senegal: Moody's downgrades rating to Ca, then MPs reject budget by 109 votes to 20

Senegal has taken two hits in two days. On November 2, 2026, Moody's downgraded the country's foreign currency sovereign rating from Caa2 to Ca, and on November 3, the National Assembly rejected the draft revision of the current year's budget, a centerpiece of negotiations with the International Monetary Fund.

According to Daba Finance, as reported by allAfrica, this is the fifth downgrade in less than two months, following the one on August 28, 2026. It follows Dakar's announcement in September of its intention to use the G20 Common Framework for debt treatment.

Default has become the "baseline scenario"

The change in rating is highly significant. The Caa2 rating still measured the probability of default; with Ca, which signals extremely high credit risk, Moody's now considers default its baseline scenario and shifts the focus to the magnitude of losses for creditors. The agency anticipates substantial losses for private external creditors during a future restructuring, according to Daba Finance.

A technical detail weighs heavily on the Senegalese: local currency debt accounts for about a third of the central government's total debt. By preserving it, Dakar reduces the scope of the restructuring but shifts the adjustment burden onto other creditors, particularly international bondholders. The outlook for local currency remains stable, with the agency considering risks balanced thanks to support from the WAEMU.

A political deadlock at the heart of the state

The following day, MPs voted 109 to 20 against the budget bill, with three abstentions, reports Africanews with AFP. The project had already been sent back to the finance committee a week earlier. It was the elected members of Ousmane Sonko's Pastef group, which holds the majority in the Assembly, who blocked it. Mr. Sonko, who became President of the National Assembly after being removed from his position as Prime Minister, is engaged in a political standoff with President Bassirou Diomaye Faye.

The deadlock could derail hopes for an IMF board vote as early as December 2026 on a $2.2 billion three-year program intended to stabilize public finances. The Fund estimated Senegal's debt at 132% of GDP at the end of 2024, following the discovery of billions of dollars in loans hidden by the previous administration.

Then there is the social cost. Youth unemployment remains high and the cost-of-living crisis has already triggered a three-day general strike, notes Africanews. The Senegalese people did not contract any of the hidden debts for which they are now being asked to make adjustments: this is the fault line of the crisis unfolding in Dakar.