Rising petrol subsidy could pose debt sustainability concerns for Nigeria – World Bank

As FG earmarks N4tr for subsidy

The global financial institution, the World Bank, has warned Nigeria’s increasing fuel subsidy could pose debt sustainability concerns for the country.

The Bank disclosed this in its latest ‘Africa’s Pulse’ report, a bi-annual analysis of the near-term regional macroeconomic outlook.

The warning comes on the heels of the National Assembly’s approval of President Muhammadu Buhari’s request to earmark N4 trillion for petrol subsidy.

According to the report, “Risk remains high on increasing fuel subsidies, which could weigh heavily on public finance and pose debt sustainability concerns”. “Nevertheless, public debt as a percentage of GDP is currently moderate”, it, however, stated.

The Washington-based institution added that the country’s soaring military spending and debt servicing costs could prey on the country’s debt sustainability level.

On sub-Saharan Africa’s recovery, the Bank noted that it is multi-speed, with wide variation across countries.

According to World Bank, growth in Nigeria is forecast to increase to 3.8% in 2022 and stabilise at 4% from 2023 to 2024.

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