Fuels: Senegal cannot finance energy populism through debt

By Lansana Gagny SAKHO Adm.A, C.M.C

The recent increase in fuel prices in Senegal has reopened a debate that cyclically resurfaces in our public space: could we not do things differently? Could we reduce taxes, contain subsidies, maintain artificially low prices to preserve the purchasing power of households?

These questions are legitimate in their social concern. They become intellectually problematicwhen formulated without answering the fundamental question they inevitably raise: who will pay the difference?

After nearly a decade at the heart of the Senegalese state, arbitrating real budget constraints and managing public institutions under financial pressure, I can say one thing with the certainty that experience provides: there is no solution without cost. There are only visible costs and deferred costs. And deferred costs always end up weighing on the same citizens with interest.

The data that structure the debate

The numbers help to put the debate on fuels in its true context. Between December 2025 and August 2026, the State had already mobilized nearly 245 billion CFA francs to contain pump prices. Without the recently decided adjustment, the bill would have risen to 1,069 billion CFA francs, while only 250 billion CFA francs were budgeted. The adjustment thus avoided an additional burden of around 824 billion CFA francs.

This situation occurs at a time when public finances are already under significant strain. Public debt is expected to exceed 26,000 billion CFA francs by the end of 2026, or nearly 1.4 million CFA francs per inhabitant. At the same time, the debt stock continues to increase, with about 1,700 billion CFA francs additional in 2025 and 1,300 billion CFA francs expected in 2026.

Certainly, Senegal can count on future revenues from hydrocarbons. Expected revenues are estimated at 703.2 billion CFA francs between 2027 and 2029, with 397.8 billion CFA francs for the year 2027 alone. But these prospects must be relativized by the increasing weight of debt service, which already absorbs nearly 27% of public revenues.

In this context, the debate on fuels goes far beyond the mere question of purchasing power. It touches on budget sustainability, debt management, and the state’s ability to sustainably finance its priorities. Any proposal for a significant reduction in taxation or an increase in subsidies must therefore be assessed in light of this financial reality. Without this, a popular short-term measure could contribute to further weakening the country’s budgetary balances.

A legitimate debate in its concern, incomplete in its method

The debate on pump prices crystallizes a real tension that every public official knows: the tension between the immediate effect on household purchasing power and medium-term budget sustainability. This tension is not a technical abstraction. It is daily for Senegalese people who calculate what they can put in their tanks, for transporters who pass on increases to their rates, for businesses whose production costs increase.

But serious public policy is not judged solely by its immediate effect on public opinion. It is judged by its financial sustainability, its long-term effects, and its coherence with the country’s real situation. The main weakness of proposals for tax reductions on fuels lies in the systematic absence of an answer to the financing question.

Yet the numbers speak for themselves. Between December 2025 and August 2026, the Senegalese state had already spent about 245 billion CFA francs to support fuel prices. Without tariff adjustment, the bill would have reached 1,069 billion CFA francs, while only 250 billion were budgeted. In other words, consumers were already benefiting from a massive effort by taxpayers to contain pump prices.

“Saying that fuel could be cheaper is easy. Explaining who will pay the difference is the real test of economic responsibility.”

Senegal is no longer in an ordinary budgetary situation

This financing question is not theoretical. It is part of a budgetary context of seriousness that commentators on the fuel debate sometimes seem to forget or downplay.

Senegal’s public debt is expected to exceed 26,000 billion CFA francs by the end of 2026, or about 1.4 million CFA francs per inhabitant. This debt increased by 1,700 billion CFA francs in 2025 and is expected to increase by 1,300 billion CFA francs in 2026. Debt service is estimated by Moody’s to absorb about 27% of expected public revenues in 2026. The debt/revenue ratio reaches 581%, among the highest in the world for a non-defaulting state.

In these conditions, any decrease in fuel tax revenue without simultaneous reduction in expenses mechanically contributes to increased indebtedness. This is not an ideological opinion. It is an accounting fact. Every franc not collected in the form of tax must be found elsewhere. Otherwise, it turns into a deficit. And each additional deficit eventually turns into debt with its interests, financial costs, and burden on future generations.

The particular responsibility of former sectoral leaders

This debate has an important institutional dimension. When a former prime minister speaks on fuels, their words carry particular weight. They are based on a supposed knowledge of price mechanisms, public finances, and sectoral constraints.

This experience creates a demand for responsibility. Citizens have the right to expect those who have exercised power to explain not only the problems but also the financing of the solutions they put forward.

Recognizing the pressure on purchasing power is legitimate. But proposing a tax reduction without specifying how to compensate for the lost revenue raises a question of economic coherence. Because a tax reduction means mechanically less public revenue and, in the absence of compensation, more deficit and indebtedness.

This is where the difference between economic responsibility and economic populism lies. The former presents both the benefits of a measure and its cost. The latter highlights the immediate advantage while leaving the question of financing in the shadows.

The exercise of power confronts budgetary constraints, arbitrations, and the realities of numbers. Governing is not just about identifying what is desirable; it is also about demonstrating that what is proposed is financeable and sustainable.

In a Senegal facing high debt and limited budgetary margins, public debate would benefit from being more nourished by budgetary truth, economic pedagogy, and a culture of responsibility.

The real question is not whether Senegalese people want to pay less for their fuel. It is whether those who advocate this option can explain what resources will replace the lost revenue and what consequences this decision would have on public debt and state investments.

This is where the difference between governing culture and political rhetoric is measured.

The perverse effect of the aggravated debt spiral

The most worrying paradox of this debate is as follows: proposals for tax reductions on fuels come precisely at a time when Senegal is trying to restore its credibility with the IMF, financial markets, and international investors after revelations about undeclared liabilities that caused four sovereign downgrades in twelve months.

However, to restore this credibility, the country must demonstrate a disciplined budget trajectory of stable revenues, controlled expenses, and reduced deficits. Accepting to forego several hundred billion in tax revenue in this context would go exactly against this signal.

The proposed solution risks producing exactly the opposite effect of what is sought: temporarily relieving consumers while worsening financial imbalances that ultimately weigh on the same citizens in the form of degraded public services, deferred investments, more expensive borrowing, or even more painful adjustments.

Energy: the real competitiveness challenge for Senegal

The debate on fuel prices at the pump tends to obscure a deeper economic reality: the cost of energy remains one of Senegal’s main competitiveness handicaps. This is a recurring topic in exchanges with international investors, who regularly cite the cost and reliability of energy as major barriers to productive investment.

Energy is not just another sector. It is a cross-cutting infrastructure that enters into the cost structure of almost all economic activities. It directly influences the production costs of industrial products, agri-food products, digital services, logistics, and transformation activities. When it is expensive or unreliable, the entire economy loses competitiveness.

Available data show that the cost of electricity for Senegalese industries remains higher than that observed in several competing countries in the sub-region. In addition to this, there are costs related to energy self-production and backup equipment that some companies continue to mobilize to secure their operations. This situation increases production costs and reduces the attractiveness of the territory for investors focused on industry and transformation.

This handicap has been known for several years and is closely linked to the structural situation of SENELEC. The company’s imbalances have long been absorbed by mechanisms of public support, even as the fundamental question remained one of its transformation, operational efficiency, and ability to provide competitive energy.

The experience of countries like Morocco or Côte d’Ivoire shows that energy competitiveness is not a coincidence. It results from long-term investments, a diversified energy mix, coherent governance, and a consistent policy aiming to ensure reliable electricity at costs compatible with industrialization.

The Senegalese paradox then becomes clear. The country now has significant hydrocarbon resources thanks to Sangomar and Grand Tortue Ahmeyim, but continues to face an energy cost that penalizes its productive apparatus. The strategic challenge is not to transform this new wealth into a permanent mechanism of consumption subsidy. It is to use it to durably reduce the cost of energy and strengthen the economy’s competitiveness.

In this perspective, three objectives should guide public action. In the short term, it is about ensuring the stability of supply and containing energy costs borne by companies. In the medium term, revenues from hydrocarbons should contribute to the modernization of the energy system, improvement of infrastructure, and reduction of network inefficiencies. In the longer term, the ambition should be to bring the cost of Senegalese industrial electricity closer to that observed in the most competitive economies in the region.

The real signal expected by investors is therefore not a one-time fuel price reduction. It is the existence of a performing SENELEC, capable of providing reliable and competitive energy, as well as a strong PETROSEN, capable of transforming the country’s natural resources into sustainable economic advantage.

In other words, the energy issue is not just about the price at the pump. It refers to a fundamental strategic choice: to use hydrocarbons as a tool for immediate consumption or as a lever for the structural transformation of the economy. It is in this second option that one of the major determinants of Senegal’s future competitiveness probably lies.

The real political courage

The debate should not pit purchasing power against budgetary rigor. It should pit two conceptions of public action against each other.

The first is based on the immediate effect promising visible benefits without exposing their financing. The second is based on economic responsibility acknowledging that every expense, every tax exemption, and every subsidy must be compatible with the real situation of public finances.

The real political courage is not to promise what everyone wants to hear. The real political courage is to explain the constraints, to make difficult choices, and to prioritize structural reforms that produce lasting results.

In the current situation in Senegal, the priority is not to increase subsidies or further reduce tax revenues. The priority is to stabilize the debt trajectory, restore the financial credibility of the state, reform SENELEC, restructure PETROSEN, and transform the country’s energy resources into a sustainable engine of development.

Lansana Gagny SAKHO  Adm.A, C.M.C

Chairman of the Board of Directors of APIX-SA

Secretary-General of CAVIE

Expert in public governance & economic intelligence