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Welfare and Macroeconomic Effects of the Sale of Fuel For ₦200 Per Litre in Nigeria: Policy Analysis in a Structuralist CGE Model
(Sokoto Journal of the Social Sciences, 2018-08) Odior, E.S.O.
The paper addressed the likely short and long run effects of 142.8 percent (₦200 Per Litre) of fuel subsidy removal on household welfare and macroeconomic growth in Nigeria. The study use a Structuralist Computable General-Equilibrium (CGE) model to run simulations that indicate the nature of the effects of fuel subsidy removal over the period 2015 – 2020. The findings show that 142.8% increases in thePremium Motor Spirit (PMS) (fuel sell at ₦200 per litre) will have several implications on some of the defined variables in this study. The findings show that ₦200 per litre pricing of petroleum products will amplify both the income and consumption losses of fuel subsidy removal, worsen inflation. The findings also show that, government income witnessed positive yearly growth, while government account balance also witnessed positive yearly growth but not at a constant rate. The fuel subsidy removal impacted positively on the output growth but reduced the level of domestic investments. This study provides a basis for recommendations on the adjustment path that the country need to take in order to mitigate the adverse impact of fuel subsidy removal on the Nigeria economy.