Senegal's "perpetual debt"; despite "relief"- by 2018 she will be back to square one.

In an internal paper, World Bank officials predict that despite HIPC "debt relief" Senegal's debt by 2018 will be larger than it is today. This is because new debt (often incurred to repay old debts) is already at $332.4 million and this figure is set to rise over the next few years.

Under the HIPC debt relief scheme, Senegal's total debt has fallen from $2.5bn to $2.1bn in net present value terms. This so-called "relief" is intended to restore Senegal to what the World Bank and IMF define as a level of "debt sustainability". However the argument that Senegal's debt will remain sustainable over the next few years is deeply flawed as it is based on optimistic projections about the country's ability to attract foreign capital. According to the World Bank's own figures Foreign Direct Investment (FDI) into Senegal fell from $56 million over the period 1993-7 to $40 million in 1998. Yet the Bank and Fund predict that foreign capital flows will increase to $88million over the period 1998 - 2008. It is this projection that enables the Bretton Woods Institutions to argue that Senegal can afford her "perpetual" debts.

In contrast to this optimistic projection, Standard and Poor, the global rating agency defines Senegal, as a country at "a low level of development, with per capita GDP of less than $500, and deficiencies in the social and physical infrastructure. Low educational standards, high poverty, and other weak human development indicators reflect the subsistence nature of Senegalese agriculture, which employs more than one half of the labour force". Senegal's population is growing fast, but 60% of the population has no access to health services; there are 7 doctors per 100,000 people and 26% of the population live on less than $1 a day. Life expectancy is only 52 years.

Senegal will pay $173.6 million in debt service this year - and a quarter of that will go to the IMF and World Bank - $21.9 million to the African Development Bank and $35.9 million to other multilateral organizations.

This is three times more than its expenditure on health - $47 million - and almost as much as its expenditure on education - $175 million. These figures might slightly increase if Senegal receives external financing.

In order to get Senegal to a level of "sustainability" the World Bank will provide $149 million over the next eight years - enough to cover 50% of Senegal's debt service - to the Bank. This year (2001) Senegal will pay $29.87 million to the World Bank - and receive $14.39 million in "relief" from the Bank.

The IMF on the other hand, will provide $51m of relief over eight years - while Senegal will pay the IMF $183.3 million over that time. This year the IMF will grant $4.7 million in "relief", at the same time collecting $26million from Senegal in debt repayments, a net transfer to the IMF of $21.3million from one of the world's poorest countries.

"This analysis has been prepared by the research team at Jubilee Plus, a project of the New Economics Foundation".