The International Monetary Fund (IMF) and Senegal have reached a staff-level agreement for a $2.2-billion three-year loan package, the IMF said on Tuesday.

In a separate statement, Senegal's ministry of economy and finance said it had agreed to an "enhanced common framework" to restore "debt sustainability". The ministry did not disclose what measures it would take.

Senegal's bonds fell to record lows after the announcement, leaving them all below 50 cents on the dollar or euro, half their original face value.

IMF Managing Director Kristalina Georgieva told Reuters in an interview on Tuesday that Senegal has had a "fairly good macroeconomic framework" but the disclosure of hidden debts put it off course requiring debt treatments to restore sustainability.

"They slipped into this undisclosed debt situation. We can work now with the commitment of the government," Georgieva said on the sidelines of a G20 finance meeting in Asheville, North Carolina. "We can work expeditiously to bring the country to a sustainable debt and strong reform programs."

Senegal's debt burden had reached 132% of gross domestic product by the end of 2024, IMF figures show, after the government uncovered billions of dollars in misreported borrowing by the previous administration.

The IMF estimates misreported debt at more than $11-billion based on figures at the end of 2023. Some analysts put it closer to $13-billion, equating to more than a quarter of the country's $40-billion economy.

The IMF froze a $1.8-billion lending programme after discovery of the misreported debt and the two sides have since been locked in drawn-out talks over a replacement scheme.

The deal announced on Tuesday requires Senegal to take "decisive corrective actions" in support of its request for a waiver related to the misreported debt, the IMF statement said, adding that this is subject to approval by the IMF management and board.

IMF Mission Chief Mercedes Vera Martin told Reuters that reform measures to avoid a similar case should be focused on better debt management and fiscal transparency.

She also said authorities were working on a revised budget meant to "rationalise" spending, but added it would not affect access to public services in the short term.

TALKS COMPLICATED BY GOVERNMENT TENSIONS

The scale of Senegal's misreported debt dwarfs Mozambique's infamous "tuna bond" scandal, which involved about $3-billion.

Talks with the IMF have been contentious. Last November former Prime Minister Ousmane Sonko said that an IMF-led restructuring of Senegal's debt would be a disgrace for the country.

President Bassirou Diomaye Faye fired Sonko in May, but Sonko was subsequently appointed president of the National Assembly, a post that could permit him to complicate implementation of any reforms required under a new IMF programme.

The latest IMF mission began in August to hold more technical discussions on policies that could lead to a new lending arrangement, which would serve as an anchor for other investment and funding, including support from donors such as the World Bank.

At the end of last year, Senegal had more than $7-billion outstanding in international bonds - nearly a fifth of total debt. About a tenth of the total debt was in the form of export credits.