Unravelling some task driven activities
With such a large institution. It is imperative to understand that certain activities form the core guidelines on which their business processes are based. Some of these include:
- Surveillance
- Lending money to countries experiencing deep economic distress.
- IMF Activities
- Capacity building – This point to the training, policy and technical assistance provided by the IMF.
The International Monetary Fund plans a mission to Senegal in August to address hidden debt and start talks on the “contours” of a new loan program, it said on Thursday. Senegal is grappling with billions in debts hidden by the previous administration, which have prompted the IMF to freeze its loan program.
“The purpose of the mission is going to be to discuss the steps needed to bring the misreporting case to our executive board,”
Interesting matters for the IMF to take care of
IMF communications director Julie Kozack said in a media briefing in Washington.
“The team will also use the opportunity to initiate discussions on the contours of a new IMF-supported program for Senegal.”
Separately, another Fund spokesperson said via email that it needs more data before it can firm up its assessment on Senegal’s debt situation and also needs an agreement on key remedial measures. The IMF’s executive board must either approve a misreporting waiver – many investors’ base case – or order Senegal to pay back previous program disbursements. With a waiver, Senegal could negotiate a new program. A spokesperson for the Fund said in response to emailed questions from Reuters:
“Once we have reached agreement on the key corrective measures, the IMF Board will be in a position to consider the Senegal misreporting case and take a decision,”
An agreement on these measures could be reached “hopefully within the coming weeks,” that spokesperson added.
Finding Senegal’s hidden activities
Bonds jumped on the news. The euro-denominated 2028 bond gained more than 3 cents to bid at 82.88 cents on the euro, and the 2033 dollar-denominated bond gained nearly 3 cents to bid at 70.64 cents on the dollar. The IMF estimates – based on latest data from Senegalese authorities – that hidden debt stood at $11.3 billion by end-2023, the spokesperson added. This included a portion for state-owned enterprises of about 7.4% of GDP. There have been a range of estimates.
S&P pegged the total hidden debt discovered since October 2024 at roughly $13 billion. The size of the hidden debt has escalated since September 2024, when the then newly elected government said an audit of government finances first flagged the issue. The scale dwarfs Mozambique’s infamous “tuna bond” scandal –the most recent hidden debt case, which involved roughly $3 billion. The “tuna bond scandal” involved some allegations of bribery and corruption.
This involved Privinvest as well as its owner Iskandar Safa being accused of paying more than $200 million in bribes to Credit Suisse and Mozambican officials. The spokesperson said that the IMF, which has come under fire for not catching the off-the-books lending, will present information to the board on how it went undetected. The spokesperson added:
“The IMF is conducting an internal assessment and diagnostic as part of the misreporting process,”
Sovereign or public debt forms an integral part of the way in which country governments finance their investments into development and growth. As with any form of debt, it is also imperative that the country continues to service this debt and also that the debt burden is at all times sustainable.