Senegal’s fuel subsidy bill could exceed its 2026 budget allocation by as much as CFA1.15-trillion ($2bn or R32.82bn) if oil prices rise to $115 per barrel during the Iran war, finance minister Cheikh Diba said on Friday.
That level would be about a fifth of the total budget, Prime Minister Ousmane Sonko said.
Diba told parliament the prime minister had turned down a request from him to raise fuel prices to help share the financial burden when the Iran crisis erupted, sending oil soaring.
Senegal’s $40bn economy has been in turmoil since late 2024, when the newly elected government disclosed debts not reported by the previous administration that are now estimated to tally as much as $13bn.
In response, the IMF froze its financing, and access to international bond markets evaporated, leaving it dependent on regional markets and tax revenues to meet its financing needs.
Oil price rises
The West African nation had budgeted CFA250bn for fuel subsidies this year before the war broke out in February.
Its current working assumption for its budget is $85 per barrel. At that level, fuel subsidies would cost CFA774bn this year, Diba said in response to a question in parliament.
But if the crisis persists and prices reach $115 per barrel, subsidy costs could rise to CFA1.39-trillion, he said. On Friday morning, Brent crude futures were up $3.3, or 3.2%, at $105.88 a barrel.
“As soon as the crisis erupted, I approached the prime minister to propose raising prices and sharing the burden with the population. The response has so far been negative,” Diba said.
“We have updated the framework, attempting to propose, based on different scenarios, situations that will allow us, all other things being equal, at least to remain on track for fiscal consolidation.”
Senegal is also an oil and gas producer, and Diba said the country would earn an additional CFA135bn in revenue in 2026 if oil prices are $85 per barrel, or up to CFA185bn at $115 per barrel.
Sonko said: “We will do everything possible to avoid passing on the price increases to the people.
“When it is no longer possible, we will return to the people to tell them that it is no longer feasible,” he said.
It was unclear whether he was referring specifically to fuel prices.
Reuters
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