Joining the debate on the gloomy public finances and stalled negotiations with the IMF, State Inspector General Ngouda Fall Kane gives his perspective. In this extensive interview with Seneweb, the first President of the National Financial Information Processing Unit (CENTIF) also spoke about the controversy surrounding the supposed hidden debt and the strategies implemented by the new government to turn things around. Interview!

 

 

Senegal is facing a difficult financial situation exacerbated by the IMF's stance, which is reluctant to grant the government new loans following accusations of hidden debt, which have been refuted by Macky Sall. You are the Inspector General of State. Can debt be hidden, and what are the procedures used?

 

It is clear that Senegal has been in a precarious financial position since 2024, marked by a very high budget deficit, 14% of GDP (GDP stopped at just over 18,000 billion CFA francs according to the World Bank), coupled with an abysmal debt with a rate of around 119% of GDP, well above the WAEMU convergence criteria. Added to this is the insufficiency of internal resources (tax and extra-tax) causing an almost permanent cash flow imbalance.

 

However, enormous efforts are being made by financial administrations to maximize the return on internal resources.

 

In this regard, it is worth noting that the Prime Minister announced a budgetary policy approach, which I fully support, an approach aimed at broadening the tax base in order to optimize tax yield. The other missing element in this approach is, in my opinion, the reduction of rates, which, unfortunately, has not been addressed.

 

This fundamental constraint of financing the Senegalese economy is aggravated by the difficulties our country has in attracting international financial resources, due to our current difficulties with the International Monetary Fund (IMF), which I hope will soon be resolved.

 

Despite this gloomy situation in the Senegalese financial economy, the State continues to meet its obligations, particularly through public appeals for savings in the WAEMU zone.

 

Speaking of the IMF, it is important to note that beyond its direct financing programs for member economies, it constitutes an essential gateway for accessing international, multilateral and bilateral financial resources.

 

We must continue to discuss with this institution with perfect negotiation skills, avoiding certain criticisms that have a blocking effect on our relations.

 

"We cannot do without the IMF"

 

In this regard, how do you assess the recent statement by Prime Minister Ousmane Sonko saying that the fate of Senegal does not depend on the IMF?

 

The Prime Minister is not entirely wrong; the development of our country requires, first and foremost, a huge amount of effort on our part. However, the permanent mismatch between financing needs and financing capacities, linked to our underdeveloped economy, requires our country to resort to external resources and therefore to borrowing, but we have to borrow. The IMF thus becomes an obligatory link between us and the international economy.

 

So, we can't do without it...

 

No, we cannot do without it. I have already said this and I insist on it. I also maintain that the internal effort of the Senegalese is essential for the economic and social development of Senegal. But we need the rest of the world, external financing.

 

 

Endogenous financing, I agree, is ideal. But it is still insufficient due to the very insufficiency of domestic savings and tax resources.

 

We must be able to call on external financing. And for that, we necessarily need the Bretton Woods institutions. We discussed the Prime Minister's comments above, and I tell you that he is not entirely wrong, but I would have suggested that he leave the handling of this matter in the hands of the Minister of Finance and the Minister of the Economy. He will be able to give them the appropriate instructions through the appropriate administrative procedures. We must let them manage this matter. Certain politicians must also know how to keep their heads. This country belongs to us. If there are difficulties, we will all feel them, without exception. Let's avoid adding fuel to the fire.

 

"I suggest the PM to speak out less on the IMF issue."

 

So the Prime Minister's intrusions are creating cacophony, in your opinion?

 

No, I'm not saying it's creating a cacophony. But I would have suggested that he be less vocal on this issue and let the technical ministries (finance and economy) handle it. He did what he had to do. He fought to implement an economic and social recovery plan (PRES) that was of pressing urgency.

 

 

But this one is built on endogenous financing   at 90%...

 

It depends on what we mean by endogenous financing. If we limit ourselves to Senegal alone, endogenous financing is insufficient. I say this and I persist. But if we can consider internal financing and that of the WAEMU financial market, where we continue to raise funds through Public Calls for Savings, as endogenous, I say that the approach is not irrelevant. We are in a union, we belong to a zone. We can extrapolate on the term endogenous to integrate this zone. Internal financing is not sufficient, because savings are insufficient.

 

To promote savings, we must encourage investment and increase household purchasing power. Finally, we cannot tax too much; too much tax kills tax.

 

In this regard, what is your assessment of the new taxes that were voted on in the National Assembly?

 

I have no particular opinion on this matter, but I remain convinced that we must avoid increasing tax pressure, which could be detrimental to businesses and households.

 

In addition to endogenous financing, we now need to be open to the outside world to be able to attract international resources. We need it. Fortunately, we are moving towards implementing a program with the IMF. This is evolving, despite the statements of some and others.

It is also appropriate, in a geopolitical approach that I consider relevant, to diversify international sources of financing, particularly by appealing to Asian and Arab countries.

 

Regarding the accusations of "hidden debt", what should we ultimately learn?

 

I'm not going to approach this issue from the perspective of what you call "hidden debt." What I understand is that an audit of the State's financial situation was carried out for the period 2019-2024, an audit certified by a contradictory audit by the Court of Auditors. This audit revealed that loans taken out were not recorded in the State's accounts.

 

Consequently, for the former direct accountant of the Treasury that I am, any public resources not traced in the Treasury's books remain an unknown resource. This is extremely serious when the auditors manage to identify the amounts not recorded in the Treasury's records and their destinations.

 

The Court of Auditors has done an excellent job which has made it possible to clarify the level of the budget deficit and the debt rate of Senegal.

 

Finally, it should be added that any public expenditure made outside the legal circuit of the Public Treasury (repayment of unregistered debt) is also extremely serious.

 

It is up to the courts to draw the consequences of the findings of the Court of Auditors' report which, in my opinion, have not been refuted either by the Mazars firm or by the IMF.

 

"The BCEAO does not manage the state budget"

 

How is it possible that we cannot trace government borrowing from the moment when, as some experts say, the borrowing goes through the BCEAO?

 

In this regard, it should be noted that the BCEAO can only give what it has received. In other words, the BCEAO can only provide the financial information that it has recorded on behalf of the State. Furthermore, it should be noted that the BCEAO does not manage the State budget, but in particular, the State's overall account in its records, which must in principle record all of the State's financial transactions.

 

So Macky Sall's argument doesn't hold water?

 

I prefer not to get into this politically charged debate. What I am saying is that the BCEAO can only trace what it has received.

 

Similarly, the audit bodies cannot be aware, a priori, of transactions not recorded in the Treasury's records without carrying out an audit. The audit that identified the financial irregularities we are talking about today was carried out by the Court of Auditors (taken over by the Mazars firm) in accordance with the 2012 law on transparency in the management of public finances.

 

Overall, the control bodies (IGE, Court of Auditors, IGF, etc.) during their control and investigation missions had to unambiguously retrace in their reports all the irregularities noted in the management of the finances of the State and local authorities.

 

Likewise, the BCEAO, in the management of the State's account in its books, regularly informs the financial authorities of any shortcomings noted.

 

 

It's true that at one point, the Court of Auditors was blamed. What is the reality?

 

Those who accuse the Court of Auditors, in my opinion, do not understand the Court's approach to auditing state accounts. It would be important for them to examine the organic law relating to the Court of Auditors to familiarize themselves with its approach and prerogatives. This also applies to other audit bodies.

 

Returning to the Court of Auditors, it regularly carries out documentary checks of the accounts of public accountants but also on-site checks, on the basis of a pre-established program, like the General State Inspectorate (IGE).

 

Following these audits, it makes proposals for improving the State's financial management system, but also imposes sanctions if irregularities are identified. These sanctions may result in the matter being referred to the courts by way of summary proceedings to be addressed to the Minister of Justice, Keeper of the Seals.

 

Some describe this hidden debt as financial engineering, meaning that the state allows parastatal companies to borrow on the international market. According to them, this explains this debt, which has not been traced. What is your analysis of this?

 

I prefer to stick, without going into what you call "financial engineering", to the excellent work that was done by the Court of Auditors and which has not been contradicted by either the Mazars firm or the IMF.

 

When we talk about hidden debt, we also imply the misappropriation of public funds, which goes hand in hand with money laundering, which CENTIF is fighting. Can you tell us about your experience as the first president of CENTIF and the main challenges you encountered?

 

I would first like to stress that all public resources which should be used to fund the Treasury accounts and which have gone elsewhere constitute misappropriation of public funds.

 

If these public resources come from loans, you can call it what you want (hidden debt or whatever), but what is constant is that these are resources unknown to the Treasury.

 

The embezzlement of public funds, as you know, is a basic offense of money laundering. Money is not embezzled to burn it, but to acquire assets or integrate it into the legal financial system.

 

It is from there that the Financial Intelligence Unit, the CENTIF, can take action if it receives financial information from those subject to the obligation to report suspicious transactions.

 

To be continued…

 

Interview conducted by Thiebeu NDIAYE