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.

Sources: Okechukwu Nnodim, Sami Olatunji and Solomon Odeniyi