A government can continue borrowing for years without major issues, as long as its economic growth, tax revenues, and repayment capacity progress at a comparable pace. The danger emerges when the cost of debt begins to grow faster than the available resources to finance it.
This is what economists call the debt snowball effect. The mechanism is simple. If the interest paid on the debt increases more rapidly than public revenues or the wealth produced in the country, the debt becomes increasingly burdensome. The state must then devote a growing share of its budget to interest payments, at the expense of investment, healthcare, education, or infrastructure spending.
This dynamic becomes particularly concerning when interest rates rise or when growth slows. A country that borrowed under favorable conditions can suddenly have to refinance its debt at much higher costs. If, at the same time, tax revenues stagnate or increase only weakly, the imbalance worsens rapidly.
Senegal partly illustrates this situation. Between 2020 and 2025, debt servicing has increased sharply due to rising borrowing, tighter financing conditions, and increasing rates on regional and international markets. In the 2025 draft finance bill, debt-related charges amount to several hundred billion CFA francs, absorbing a growing share of public resources.
The phenomenon becomes even harder to contain when the state must borrow no longer to finance new projects, but simply to repay previous maturities or pay interest. Part of the debt then serves to maintain the debt itself. This creates a cycle where each new loan increases future charges.
The shorter the maturities, the higher this risk. A state heavily reliant on short-term debt must regularly return to the markets to refinance its maturing obligations. If investors become more cautious or demand higher yields, the refinancing cost can climb quickly.
This mechanism explains why some countries can find themselves in difficulty even without having a particularly high debt-to-GDP ratio. What matters is not just the stock of debt, but also the pace at which interest increases, the maturity structure, and the economy's capacity to generate revenue.
To avoid this spiral, several levers exist. Extending the maturity of loans, reducing deficits, mobilizing more tax revenue, and prioritizing investments capable of generating growth can help slow this dynamic. Because debt is not necessarily problematic in itself. It becomes so when it grows faster than the means to repay it.
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