Senegal’s fuel subsidy costs could overshoot its 2026 budget by as much as 1.15 trillion CFA francs (about US$2 billion) if global oil prices surge to S$115 per barrel during the ongoing Iran-related conflict, Finance Minister Cheikh Diba has warned.
Diba told parliament on Friday that the subsidy burden could rise sharply if the oil market remains volatile, potentially pushing total spending on fuel support to unsustainable levels and straining already fragile public finances.
At current projections of US$85 per barrel, subsidy costs are expected to reach about 774 billion CFA francs this year, far above the 250 billion CFA francs initially budgeted. Under a more severe scenario of US$115 per barrel, the bill could climb to 1.39 trillion CFA francs, the minister said.
Prime Minister Ousmane Sonko said the higher-end estimate would represent roughly one-fifth of Senegal’s total national budget, underscoring the fiscal pressure created by sustained energy price shocks.
The warning comes as global oil markets remain highly volatile, with Brent crude recently trading above $100 per barrel following disruptions linked to geopolitical tensions in the Middle East.
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Senegal has been trying to stabilise its public finances since late 2024, when the new government disclosed previously unreported debts estimated at up to $13 billion. The revelation led to a suspension of International Monetary Fund (IMF) financing and cut the country off from international bond markets.
As a result, Dakar has become increasingly reliant on domestic revenue mobilisation and regional financial markets to meet its financing needs, limiting its fiscal flexibility in responding to external shocks.
Diba told lawmakers that he had proposed raising fuel prices to share the cost burden with consumers when the crisis began, but said the proposal was rejected by the prime minister’s office.
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He said the government has instead been working with updated budget scenarios to maintain fiscal consolidation while managing the impact of higher import costs.
Senegal had initially allocated 250 billion CFA francs for fuel subsidies in 2026 before the latest oil price surge, but officials now acknowledge that figure is unlikely to hold under current conditions.
Despite being a net importer of refined fuels, Senegal is also an emerging hydrocarbon producer, and officials estimate that higher oil prices could increase state revenues by between 135 billion CFA francs and 185 billion CFA francs depending on market conditions.
However, these gains are not expected to fully offset the rising subsidy bill, leaving a widening gap between energy-related revenues and expenditure.
Prime Minister Sonko has pledged that the government will seek to avoid passing higher fuel costs directly onto households for as long as possible, although he warned that such a policy may not be sustainable indefinitely.
“We will do everything possible to avoid passing on the price increases to the people,” he said, adding that the government would return to citizens if conditions make continued subsidies unworkable.
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Economists say Senegal’s fiscal position remains vulnerable due to high debt exposure, limited access to external financing, and sensitivity to global energy price movements.
The situation highlights the broader challenge facing many West African economies that are simultaneously exposed to imported fuel costs while attempting to manage domestic inflation and protect social stability.
Analysts warn that prolonged oil price spikes could force difficult trade-offs between subsidy spending, development investment and fiscal consolidation targets in the months ahead.
