DAKAR, May 22 (Reuters) – Senegal’s fuel subsidy bill could exceed its 2026 budget allocation by as much as 1.15 trillion CFA francs ($2 billion) if oil prices rise to $115 per barrel, Finance Minister Cheikh Diba said on Friday.
Senegal’s $40 billion economy has been in turmoil since 2024, when the new government disclosed unreported debts, which are now estimated at up to $13 billion.
The IMF froze its financing and access to international bond markets evaporated, leaving Senegal dependent on regional markets and tax revenues.
Diba told parliament Senegal expects to resume talks with the International Monetary Fund on a new finance programme in the week of June 8 and hopes to agree on the main points by June 30.
He said the main point of contention was debt treatment, and that President Bassirou Diomaye Faye had proposed an alternative to restructuring to IMF Managing Director Kristalina Georgieva.
He gave no details except to say it would be more effective, “given the complexity of our debt”, and also come at a much lower cost. The IMF did not immediately respond to a request for comment.
Senegal’s 2033 dollar-denominated bond gained 0.5 cents in response to the comments to bid at just over 53 cents on the dollar, its strongest level since mid-May, Tradeweb data showed
Oil shock from war in Gulf
Senegal had budgeted 250 billion CFA for fuel subsidies this year before the U.S. and Israel attacked Iran in February, triggering a surge in oil prices.
Prime Minister Ousmane Sonko told parliament it would now need an extra 1 trillion CFA or more, equivalent to a fifth of the total budget.
Diba said Sonko had turned down his request to raise fuel prices.
Senegal is currently budgeting for an oil price of $85 per barrel, which would require 774 billion CFA in fuel subsidies this year, Diba said.
But if prices reach $115 per barrel, subsidy costs could rise to 1.39 trillion CFA, he said. At 1506 GMT, Brent crude futures LCOc1stood around $104.50.
Senegal is also an oil and gas producer, and Diba said it would earn an additional 135 billion CFA in revenue in 2026 at $85 per barrel, or up to 185 billion CFA at $115 per barrel.
Sonko said: “We will do everything possible to avoid passing on the price increases to the people.”
It was unclear whether he was referring specifically to fuel prices.
