Higher oil prices will increase subsidy cost, fitech tells Nigeria

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Fitch Ratings has affirmed Nigeria’s long-term foreign-currency issuer default rating at ‘B’ with a stable outlook.

It disclosed this in its latest report released on Monday titled ‘Fitch affirms Nigeria at ‘B’; Outlook stable’.

The report also said that the decision of the Federal Government to reverse its plan to phase out the implicit fuel subsidies that support price controls on petroleum would reduce benefits accruing from increase in oil price.

The report said, “Higher oil prices would also boost the subsidy cost, denting the benefit of higher global oil prices to the budget.

“We forecast the 2022 general government fiscal deficit to remain broadly unchanged from 4.1per cent of Gross Domestic Product in 2021. However, we estimate that $10 per barrel increase would narrow the fiscal deficit by 0.5 per cent of GDP.

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