West Africa Needs Its Own Draghi Moment by Fernando Morra & Anahí Wiedenbrüg
Senegal’s debt crisis has exposed a deeper vulnerability within West Africa’s monetary union. Unable to devalue the shared currency, member countries must either endure painful internal adjustment or boost exports to earn the foreign currency they need to repay external creditors.
GENEVA—Ever since the discovery of previously undisclosed liabilities revealed the true size of Senegal’s public debt, the country’s political debate has revolved around a single question: Should it restructure? Many economists argue that it should, while others believe that fiscal adjustment and stronger institutions can restore confidence without imposing losses on creditors. Both sides, however, mistakenly assume that Senegal’s challenge is primarily a fiscal one.
