DAKAR, May 22 – Senegal warned that its fuel subsidy bill could exceed budgeted levels by as much as 1.15 trillion CFA francs ($2 billion) if global oil prices rise to $115 per barrel, highlighting growing fiscal pressure from the ongoing energy shock.
Finance Minister Cheikh Diba told lawmakers on Friday that Senegal had originally budgeted 250 billion CFA francs for fuel subsidies in 2026 before the escalation of conflict involving the United States, Israel and Iran triggered a sharp rise in global energy prices.
The government now estimates subsidy costs could reach 774 billion CFA francs if oil averages $85 per barrel this year.
If crude prices climb to $115 per barrel, total fuel subsidy costs could surge to 1.39 trillion CFA francs, according to Diba.
At current market levels, Brent crude has been trading above $100 per barrel following disruptions linked to tensions in the Middle East and shipping risks around the Strait of Hormuz.
Prime Minister Ousmane Sonko told parliament that the country may require more than 1 trillion CFA francs in additional support to absorb the fuel-price shock without fully passing costs onto consumers.
Diba said Sonko rejected proposals to increase domestic fuel prices despite mounting fiscal pressures.
“We will do everything possible to avoid passing on the price increases to the people,” Sonko said.
The subsidy burden comes at a difficult time for Senegal’s economy, which has faced heightened financial strain since the government disclosed previously unreported debts in 2024 estimated at as much as $13 billion.
The revelations led the International Monetary Fund to suspend financing support, while Senegal effectively lost access to international bond markets.
The country has since relied more heavily on regional debt markets and domestic tax revenues to finance government operations.
Diba said Senegal expects to resume negotiations with the IMF on a new financial support programme during the week of June 8 and hopes to reach agreement on key terms before the end of June.
According to the finance minister, the primary issue under discussion remains debt treatment.
He said President Bassirou Diomaye Faye had proposed an alternative approach to debt restructuring during discussions with IMF Managing Director Kristalina Georgieva.
Diba gave no details about the proposal beyond saying it would be more effective “given the complexity of our debt” while carrying significantly lower costs.
The IMF did not immediately comment on the proposal.
Investor sentiment nevertheless improved slightly following the comments, with Senegal’s 2033 dollar-denominated bond rising modestly in secondary trading.
Despite fiscal pressures from higher energy prices, Senegal is also beginning to benefit from its emergence as an oil and gas producer.
Diba said the country could generate an additional 135 billion CFA francs in oil-related revenue at an average oil price of $85 per barrel, rising to as much as 185 billion CFA francs if prices climb to $115.
The situation underscores the increasingly difficult balancing act facing African governments as rising global energy costs pressure public finances, inflation and social stability simultaneously.
