Senegal is expected to appoint Lazard as its financial adviser on debt matters, according to three sources familiar with the situation, as investors closely watch the country's efforts to tackle its debt burden.

The West African nation has been working to shore up public finances since 2024, when the then-new government disclosed previously unreported debts that eventually topped $13-billion, more than a quarter of its gross domestic product.

Sources told Reuters last week that authorities launched a selection process to choose a financial adviser. Such appointments are often viewed as an early step in preparing for creditor discussions, though they do not necessarily signal an imminent restructuring.

Lazard declined to comment. Senegal's finance ministry did not comment.

Bloomberg first reported Lazard's appointment.

Lazard is expected to work alongside Paris-based Global Sovereign Advisory, according to the sources. Senegal announced in November that GSA was acting as a financial adviser to the government.

Senegal has been negotiating a new IMF programme since the Fund suspended a previous $1.8-billion loan following the discovery of misreported debt. To unlock fresh financing, Dakar must show that its debt burden is on a sustainable trajectory. An IMF deal would also serve as a crucial anchor for broader external funding.

Senegal has repeatedly ruled out a sovereign debt restructuring, and has relied on regional markets to fund itself. But borrowing costs remain high, international market access is effectively shut and financing needs are growing.

Investors increasingly view a debt restructuring as unavoidable.

"Assuming that Senegal is committed to an IMF program, our base case is that a debt renegotiation will be necessary, and we view a muddle through scenario as increasingly unlikely," Citi analysts said in a note to clients published on Wednesday.

"Our external debt renegotiation scenario assumes a large nominal haircut will be required."

Senegal's international euro- and dollar-denominated bonds are trading at distressed levels, with most maturities bid between 52 and 58 cents on the dollar or euro, down as much as 0.8 cents on the day.