The World Bank has advised President Muhammadu Buhari to act urgently if he is seriously considering the removal of fuel subsidy.
The advice was given by the Lead Economist of the World Bank, John Litwack at the launch of the bank’s third Nigeria Economic Report (NER) in Abuja on Tuesday.
Litwack said that although fuel subsidy appeared to have very modest benefits for the majority of Nigerians, the cost implications were quite high while also adding that if the government really meant to take a decision on the issue of fuel subsidy removal, the best time to act would be now that global crude oil price was at its lowest level.
He noted that the annual spending on fuel subsidy in the country accounted for about one-fourth of all budgetary spending.
According to him, this is significantly greater than the entire federal capital budget and greater than all federal spending on education and public health combined.
He said, “The fuel subsidy appears to have vast modest benefits for the majority of citizens, but the costs are quite high, There is a strong tendency for the cost of the fuel subsidy to increase over time as increasing domestic demand for petrol outpaces growth in oil output or revenues.”
“The $35 billion cost of the fuel subsidy during 2010 – 2014 was one of the reasons why Nigeria was unable to accumulate a fiscal reserve n the Excess Crude Account that could have protected the country from the recent oil price shock.”