The World Bank says increasing fuel subsidy puts the Nigerian economy
at a high risk as subsidy payments could significantly impact public finance and pose debt sustainability concerns as it would deteriorate the country’s fiscal balance.

The Washington-based lender said this in a new biannual report known
as Africa’s Pulse.

According to the bank, Nigeria is projected to have a 3.8 per cent growth
in 2022, adding that as an oil-dependent country, weak oil production
hampers economic recovery.

It added that the increasing fuel subsidy poses a high risk to the
country’s economic growth, despite the increase in oil prices.

According to the World Bank, the high level of oil prices will affect
countries that are shielding the impact on their consumers through fuel
subsidies, such as Nigeria and Ethiopia.

In 2021, the Nigerian National Petroleum Corporation said fuel subsidy
gulped N1.43tn, although there was no record for under-recovery in
January.

The National Assembly has approved N4tn as fuel subsidy bill for 2022,
which is an increase of 179.72 per cent over the previous year’s subsidy
bill.