Mohamed Ndiaye, financial economist: “The refusal of the Lfr does not make energy expenditure or salaries disappear”

In this interview, Dr. Mouhamed Ndiaye, financial economist, analyzes the rejection of the 2026 amended finance bill (Lfr). According to him, the rejection of the collective budget by the National Assembly does not eliminate either the energy bill or the State’s commitments, much less the country’s financing needs. Beyond the institutional disagreement, he believes that the urgency is to preserve economic stability and protect populations.

What comment do you make on the rejection of Lfr 2026 by the National Assembly?

The National Assembly rejected the amended finance bill (Lfr) 2026 following the adoption of a preliminary question, by 109 votes to 20, with 3 abstentions. This procedure resulted in the text being rejected without substantive examination. To my knowledge, such a decision is unprecedented in our recent budgetary history. This rejection is not abnormal in principle. In a democracy, the Executive proposes and Parliament disposes. Parliamentary control, including the rejection of a draft budget, falls squarely within the prerogatives of MPs. The questions raised about budgetary sincerity therefore deserve precise answers.

But, beyond this institutional confrontation, an essential question arises: what will be the consequences of this decision for Senegal and its citizens?

An amending finance law allows the State to adapt its budget when the economic and financial situation deviates from initial forecasts. In 2026, several shocks have profoundly disrupted Senegal’s financial balance. The rise in oil prices, in the context of the war in the Middle East, pushed the barrel from around $73 in February to more than $110 in April. At the same time, energy subsidies increased from 250 to 790.3 billion FCfa. At the same time, expected economic growth was revised from 5% to 2.7%, while the revenue mobilization measures of the Economic and Social Recovery Plan brought in 311.5 billion FCFA, compared to 762.9 billion initially planned. The new budgetary projections show 7,583.9 billion FCfa in expenditure for 5,848.7 billion FCfa in revenue, i.e. a deficit of 7.6% of GDP. In other words, around 23 FCfa out of 100 spent by the State must be covered by debt. The budgetary adjustment therefore responded to a need to adapt to a profoundly changed economic and financial situation.

What are the consequences for government obligations?

The refusal of the Lfr does not eliminate energy costs, salaries, family grants, and even less debt repayments. Debt interest alone is estimated at 1,285 billion FCfa in 2026, or around 26% of tax revenue. The difficulty is now as much legal as financial. In the absence of adoption of the Lfr, the proposed budgetary adjustments do not benefit from the requested parliamentary authorization. The Executive’s room for maneuver and the procedures to ensure the continuity of budget execution are thus subject to divergent legal interpretations. This uncertainty occurs in a context where the country particularly needs stability, visibility and confidence.

With this rejection, how will the State manage to address citizens’ concerns?

For households, the main risk concerns purchasing power and social protection. The Lfr notably planned to increase the credits devoted to family security grants from 35 to 70 billion FCfa, for the benefit of more than a million households, as well as to increase the credits allocated to health by 28.8 billion FCfa. The implementation of these measures now becomes more uncertain. For businesses, the situation could accentuate cash flow tensions. State payment arrears, estimated at 1,956 billion FCFA as of December 31, 2024, are already weakening many operators, particularly in construction and sectors dependent on public procurement. Any further slowdown in payments could further weigh on investment and employment. Structuring projects are also concerned. Public investments have already suffered a reduction of 555 billion FCFA, or nearly 20%. Several projects in the areas of health, education and access to water are expected to be reprogrammed in the 2027 budget. The current uncertainty, however, risks further delaying their completion. Finally, the rejection of the Lfr could weaken the confidence of technical and financial partners. Senegal is awaiting validation of a $2.2 billion program with the IMF, while certain external financing is already suspended. In the WAEMU regional market, where the country must mainly mobilize its resources, a decline in confidence could also increase the cost of debt and reduce the financing available to the private sector.

How to get out of the impasse?

The rejection of the Lfr does not call into question the need for a budgetary adjustment. Rather, it requires us to quickly seek an institutional and financial solution. The first priority must be the resumption of dialogue between the government and the National Assembly. The concerns of deputies regarding the sincerity of the data relating to the debt and the deficit, the use of the 120 billion FCfa from emergency financing from the World Bank, the protection of priority investments and the reduction of the State’s lifestyle must receive documented and transparent responses. The rapid transmission of the requested documents and, if necessary, the presentation of a new text constitute avenues to be favored.

At the same time, the legal mechanisms provided for by budgetary legislation, in particular the use of advance decrees under conditions strictly regulated by the texts, must be examined with caution, while respecting the principles of legality and democratic control. On the financial front, it is essential to favor concessional resources, to continue processing the debt and to improve the quality of public spending. Better targeting of subsidies, the rationalization of public structures, the strengthening of control of special funds and the broadening of the tax base, particularly in the digital and land sectors, must help to create new room for maneuver, without excessively increasing the tax pressure on taxpayers and businesses already under heavy strain.

Senegal is at a historic turning point with its entry into the era of oil and gas production. This wealth represents a major opportunity to accelerate the transformation of our economy, create jobs, strengthen our human capital and sustainably improve the living conditions of populations. But this ambition requires rigorous governance, transparent management of public resources and institutions capable of dialogue and overcoming their differences when the best interest of the Nation requires it. The issue is therefore not to designate a winner or a loser. The government and the National Assembly each have their legitimacy, but also a common responsibility: to ensure that citizens, businesses, students and farmers do not become the victims of institutional disagreement.

Interview conducted by Demba DIENG