kunzel: The World Bank on Wednesday warned that subsidy on petroleum products in Nigeria and other oil-producing African countries would be unsustainable in the medium term. It also predicted that lower oil prices would hurt Nigeria and other African oil- producing countries, noting that a repeat of the 2008/2009 financial crisis in Europe would curtail fiscal growth in many African countries. On the flip side, it said Nigeria was the sixth fastest growing economy in Africa in 2011, standing behind Ghana, Rwanda, Eritrea, Ethiopia and Mozambique ahead of Congo Republic, Zambia, Tanzania and Botswana. These warnings were contained in the April edition of the “Africa’s Pulse” magazine, an in-house publication of the World Bank’s Africa region. It was prepared by a 10-man team headed by the Chief Economist for the Africa region, Shanta Devarajan. It stated, “In 2010-11, over half of all African countries had some subsidy in place for fuel products, and these subsidies consumed, on average, 1.4 per cent of GDP in public resources. Of the 25 countries with fuel subsidies, the fiscal cost of subsidies in six countries — primarily oil exporters — was at or above two per cent of GDP in 2011. “The fiscal cost in oil exporters was almost two-and-a-half times the levels observed for oil importers. These costs have grown sharply in some countries in recent years. In countries facing substantial fiscal deficits and rising public debt levels, the fiscal space to subsidise fuel costs is constrained.”

http://www.punchng.com/business/money/fuel-subsidy-is-unsustainable-world-bank/