Senegal’s fuel subsidy bill could exceed its 2026 budget allocation by as much as CFA1.15 trillion — equivalent to approximately $2 billion — if oil prices rise to $115 per barrel, Finance Minister Cheikh Diba has warned parliament, laying bare the acute fiscal pressure that rising global crude prices are placing on one of West Africa’s most closely watched emerging economies.
The West African nation had originally budgeted CFA250 billion for fuel subsidies in 2026, working from a baseline assumption of $85 per barrel. At that price level, the actual subsidy cost is now projected to reach CFA774 billion. Should crude prices climb to $115 per barrel, total subsidy expenditure could reach CFA1.39 trillion — a sum representing approximately one-fifth of Senegal’s entire national budget, Prime Minister Ousmane Sonko indicated. Brent crude futures were trading at $105.88 a barrel as Diba delivered his parliamentary remarks.
Diba told lawmakers that he had approached the prime minister with a proposal to raise retail fuel prices in order to share a portion of the financial burden with consumers, but said that proposal was rejected. ‘As soon as the situation deteriorated, I approached the prime minister to propose raising prices and sharing the burden with the population. The response has so far been negative,’ he told parliament. Sonko, for his part, pledged to do everything possible to avoid passing price increases on to Senegalese citizens, while acknowledging that a point might come when absorbing the full cost is no longer feasible.
Senegal’s fiscal position has been under strain since late 2024, when the newly elected government disclosed previously unreported debts now estimated at as much as $13 billion. The IMF subsequently froze its financing programme and Senegal’s access to international bond markets evaporated, leaving the country dependent on regional capital markets and domestic tax revenues to meet its financing needs. Diba noted one partial offset: as an oil and gas producer, Senegal stands to earn an additional CFA135 billion in hydrocarbon revenue in 2026 at $85 per barrel, rising to CFA185 billion at $115 per barrel — but those gains cover only a fraction of the widening subsidy gap.
Source: timeslive.co.za