Transition to an oil-based economy in Senegal: What are the expected effects on external macroeconomic dynamics?

Transition vers une économie pétrolière au Sénégal: Quels effets attendus sur la dynamique macroéconomique externe ?

Pape Gueye () and Younouss Sané
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Pape Gueye: LARSES - Laboratoire d'Etude et de Recherche en Sciences Economiques et Sociales - UASZ - Université Assane Seck de Ziguinchor [Sénégal]
Younouss Sané: LARSES - Laboratoire d'Etude et de Recherche en Sciences Economiques et Sociales - UASZ - Université Assane Seck de Ziguinchor [Sénégal]

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Abstract: The start of oil production in Senegal marks a new milestone in the country's economic trajectory and raises important questions regarding its impact on external macroeconomic balances. This article analyzes the influence of the oil economy on Senegal's external dynamics, specifically focusing on the current account, non-oil exports, imports, economic growth, and the real exchange rate. The study draws on annual data from 2000 to 2023—primarily from the World Bank—and employs a Vector Autoregression (VAR) model, complemented by stationarity, Granger causality, and Johansen cointegration tests, as well as impulse response function analysis. The results reveal the existence of three cointegration relationships, confirming long-term structural links between key macroeconomic variables and oil-related determinants. Notably, the model shows that the oil sector significantly influences Gross Domestic Product (GDP), non-oil exports, and the current account. Hydrocarbon revenues can thus help strengthen Senegal's external position, boost foreign currency inflows, and alleviate certain external constraints. However, international oil prices and oil revenues remain heavily dependent on exogenous factors, such as global market conditions, OPEC decisions, technical production conditions, and extraction schedules. The findings also highlight the potential risk of "Dutch disease" and the vulnerability associated with oil revenue volatility. Ultimately, the study underscores that the positive effects of the transition to an oil economy are not automatic; they depend crucially on the quality of governance, transparency in revenue management, economic diversification, and fiscal prudence. Establishing stabilization mechanisms and ensuring the sustainable management of oil revenues is therefore essential to transforming extractive rents into a genuine driver of economic development and a means of strengthening Senegal's external position.

Keywords: économie pétrolière; Sénégal; dynamique macroéconomique externe; compte courant; revenus pétroliers; exportations; VAR; cointégration; syndrome hollandais; économie pétrolière Sénégal dynamique macroéconomique externe compte courant revenus pétroliers exportations VAR cointégration syndrome hollandais (search for similar items in EconPapers)
Date: 2026-09-01
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