Senegal increases Fuel Prices to limit Govt spending on Subsidies

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Senegal lifted prices on subsidised fuels for a second time after last year’s surge in oil to alleviate a squeeze on the government’s budget.

As of January 7, a litre of diesel cost 755 CFA francs ($1.23), up from 655 CFA francs while the price of unleaded fuel rose to 990 CFA francs from 890 CFA francs.

The increase was necessary to limit public spending on subsidies and redirect aid toward the most vulnerable households, Oil Minister Sophie Gladima stated.

Government expenditures on fuel subsidies in Senegal nearly quadrupled last year to 580 billion CFA francs, according to initial estimates.The most recent price hikes should allow Senegal to limit that cost in 2023 to about 450 billion CFA francs, Trade Minister Adbou Karim Fofana said.

Like many of its neighbours, the west African country is facing a spiralling cost-of-living crisis. Surging energy and food prices have propelled inflation above 14 per cent.

Senegal’s President Macky Sall unveiled a relief plan worth about 500 billion CFA francs in November that includes rent subsidies and price caps on many basic goods to ease pressure on millions of households.

According to Sall, the start of oil and gas production this year may ease some strains on public coffers. Crude exports from the country’s offshore Sangomar field are expected to start in the second quarter, a facility for liquefied natural gas is set to come online over the following three months. The economy will grow more than 10% this year.