Senegal had a fuel subsidy plan for 2026, until the U.S. and Israel struck Iran in February, oil prices jumped, and the math broke.
Now the country's finance minister is telling parliament that the subsidy bill could land $2 billion over budget, in a country whose entire economy is worth about $40 billion.
That is a fifth of the national budget going just to hold the line on gas prices.
The Oil Math
Senegal had set aside 250 billion CFA francs for fuel subsidies this year, before Finance Minister Cheikh Diba broke down the new numbers for parliament on Friday.
If Brent crude averages $85 a barrel in 2026, the country will need 774 billion CFA in subsidies, and Brent was trading around $104.50 on Friday afternoon, well above that mark.
At $115 a barrel, the bill jumps to 1.39 trillion CFA, which is roughly $2 billion above the original plan and the kind of hole that does not get patched with normal budget cuts.
Senegal does have one cushion, since it also pumps oil and gas, which would add roughly 135 billion CFA in extra revenue at $85 oil or up to 185 billion CFA at $115. Neither figure comes close to closing the subsidy gap.
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The IMF Standoff
Senegal's bigger problem started before the oil spike, when the new government disclosed roughly $13 billion in debts the previous administration had not reported.
The IMF froze its financing program after the disclosure, and international bond markets shut, which has left Senegal running on regional debt markets and tax revenue ever since.
Diba told parliament that the country expects to restart IMF talks the week of June 8, with hopes of agreeing the main points by June 30.
The biggest fight is over debt treatment, where President Bassirou Diomaye Faye has reportedly pitched an alternative to outright restructuring to IMF Managing Director Kristalina Georgieva.
Bond investors took notice, with Senegal's 2033 dollar bond rising half a cent to just over 53 cents on the dollar after the comments, which marked its strongest level since mid-May.
What To Watch
Prime Minister Ousmane Sonko ruled out passing the higher costs through to drivers, telling parliament the government will do everything possible to avoid passing on the price increases to people.
That puts the entire burden on the budget and on whatever deal Senegal can land with the IMF over the next six weeks.
The oil shock turned a tough fuel problem into a much bigger one.
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