The Senegalese government's proposed 2026 finance bill has been rejected by parliament, despite efforts to address concerns and provide explanations. The bill, which aimed to revise the country's budget in response to a less favorable economic outlook, was voted down along with two amendments presented by the government. The rejection marks a significant setback for the administration, which had argued that the bill was necessary to address pressing economic challenges.
The government's decision to revise the budget was driven by a downward revision of economic growth, from 5% to 2.7%, and a decline in state revenues of approximately 415 billion FCFA. At the same time, expenditures were set to increase by nearly 74 billion FCFA. These changes led to a projected budget deficit of 1,735.2 billion FCFA, or 7.6% of GDP, up from 5.4% initially forecast. The government insisted that this figure was an authorization ceiling, rather than a definitive forecast.
A significant factor driving the government's budget revisions was the increase in energy costs, including fuel and electricity. The state plans to increase subsidies to 790.3 billion FCFA, up from 250 billion FCFA initially allocated to the energy sector support fund. As of October 10, public support for fuel had reached 132 FCFA per liter of supercarburant and 391 FCFA per liter of gasoil, resulting in an estimated monthly bill of nearly 58 billion FCFA.
The government also pointed to the importance of implementing the Economic and Social Recovery Plan (PRES), which aims to generate revenue through fiscal measures. However, revenue projections from these measures were revised downward, from 762.6 billion FCFA to 311 billion FCFA. By the end of September, only 174 billion FCFA had been collected, highlighting the need for accelerated revenue mobilization in the final quarter.
To address urgent needs, the government turned to emergency financing, including a $208 million loan from the World Bank. These funds, which come from resources already earmarked for four projects, will be allocated to energy supply and social transfers. The government emphasized that these projects will continue into 2027.
To free up resources, the government reduced investment spending by approximately 555 billion FCFA, including 315 billion FCFA from internal resources and 239 billion FCFA from external financing. Ministers justified these cuts by citing the level of project maturity, existing commitments, and realistic execution possibilities. Some investments, such as the Grand Transfer d'Eau, are now slated for 2027, pending necessary validations and financing.
Despite the government's explanations, parliamentarians expressed concerns about the cuts, particularly with regard to infrastructure projects in the health and education sectors. They also sought greater transparency on suspended, postponed, or abandoned projects, as well as the effective use of budget resources. The management of debt and arrears remains a point of contention, with the government owing 2,494.9 billion FCFA as of the end of 2024.
Key points
- The Senegalese government's 2026 finance bill was rejected by parliament due to concerns over the budget deficit and revenue projections.
- The government cited a less favorable economic outlook and increased energy costs as reasons for revising the budget.
- The rejection marks a significant setback for the administration, which had argued that the bill was necessary to address pressing economic challenges.
