Country Brief: Creating fiscal space for social protection in Senegal through the reallocation of fuel subsidies

In January 2023, the Government of Senegal reduced subsidies for petroleum products (super gasoline fuel) and the social subsidy for electricity. This measure was expected to result in savings of around 99.7 billion CFA francs (US$177 million) from the reduction of the subsidy for electricity and 158.5 billion CFA francs (US$281 million) from the reduction of the subsidy for petroleum products, giving total savings of 258.2 billion CFA francs (US$458 million).

The Government has used these savings to extend the fiscal space for social protection. Specifically, it applied from January 2023 a 40 per cent increase in the relative value of the allowance provided to poor and vulnerable families, which nominally rose from 25,000 CFA francs (US$41) to 35,000 francs (US$58) per quarter. This increase reached all 316,940 households covered by the family allowance programme and directly impacted the lives of approximately 2.7 million Senegalese, among them some of the poorest people in the country. Through this reallocation of subsidies to social protection transfers, the Government was able to maintain the purchasing power of poor and vulnerable households.

The reform of fuel and electricity subsidies in Senegal and the reallocation of budgetary resources to expand the family allowance programme constitute a specific example of public policies that reduce greenhouse gas emissions while mitigating the social impact of such measures and compensating for their effect on the poorest households. This initiative also illustrates how social protection can be financed through strategic budgetary reallocations.