The Nigerian government’s removal of the petrol subsidy is crucial to restore macroeconomic stability, but the country needs a new social compact to protect poor and vulnerable citizens. “With the petrol subsidy removal, the government is projected to achieve fiscal savings of approximately two trillion naira ($2.6 billion) in 2023, equivalent to 0.9% of GDP. Decision to remove petrol subsidy first step towards restoring macroeconomic stabilityReal gross domestic product (GDP) growth fell from 3.3% in 2022 to 2.4% year-on-year (y-o-y) in Q1 2023. For years, Nigeria maintained an opaque, fiscally unsustainable and socially unfair petrol subsidy, the report said. However, by Q1 of 2024, the subsidy removal will start to have a disinflationary effect, meaning that it will alleviate inflationary pressures despite higher petrol prices.

Source: The North Africa Journal July 13, 2023 08:29 UTC