FDC ECONOMIC MONTHLY PUBLICATION – APRIL 17, 2019 (Re: Subsidy Reduction – No Easy Options, Delay is no Cure)

Dear Subscriber,

Petrol queues in Nigeria are the first signs of impending fiscal and monetary adjustments. The spectre of higher petrol price and currency weakness has haunted Nigerians for decades. It immediately brings home the problem of a country living above its means or spending money it has not earned. It is now a ritual that precedes a macro-economic strategy review.

But, as it was in the 1990s, the IMF is warning again that petrol subsidies are neither affordable nor sustainable. The Federal Government’s response is as predictable as it was certain – insufficient buffers to provide a social safety net for the common man.

This vicious cycle of events, should we say circus, will have far reaching implications on Nigeria’s fiscal consolidation and the hope for accelerated growth. There is a typical trade-off between short-term pains and long-term gains. However, kicking the can down the road (indecision) does not usually solve the problem, it only delays the inevitable.

In this edition of the FDC Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and investment decisions.

Enjoy your read.