Fuel

 

 Following the Federal Government’s plan to extend the fuel subsidy regime by 18 months, the International Monetary Fund has said Nigeria will likely depend on overdrafts from the Central Bank of Nigeria to fund its proposed N2.55tn petrol subsidy bill. The IMF said this in its ‘Nigeria: Selected Issues Paper’ report, which was prepared by a staff team of the Fund as background documentation for its periodic consultation with Nigeria. According to the report, fuel subsidy negatively affects the country’s fiscal position, increasing fiscal deficit. The Washington-based lender said, “Implicit fuel subsidies have a significant negative impact on Nigeria’s fiscal position, which is estimated to increase the overall fiscal deficit by around one percentage point of the Gross Domestic Product in 2021. “Despite much higher oil prices, the general government fiscal deficit is projected to be significantly worse at 6.3 per cent of the GDP, compared to 4.7 per cent of GDP in the 2020 Article IV staff report, mainly reflecting the reemergence of implicit fuel subsidies and higher spending in the supplementary budget for security and vaccine costs.”

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