Monday, October 10, 2011

Nigeria Moves to End Fuel Subsidy, Raise Spending by 7%

Business Week
5 October 2011

Oct. 5 (Bloomberg) -- Nigeria’s government plans to end fuel subsidies, weaken the naira and raise spending by 7 percent in its budget next year as oil prices ease.

Scrapping the fuel allowance, which is planned over the next three years, will save the government 1.2 trillion ($7.5 billion) in 2012, according to a three-year plan sent to parliament by the Budget Office.

Africa’s top oil producer is facing declining revenue as the price of oil, the source of more than 95 percent of export income and 80 percent of government earnings, fell 28 percent in the past six months. The naira slumped to a record low of 160.65 against the dollar today, while foreign currency reserves, used to fund the central bank’s twice-weekly auctions to stabilize the naira, have fallen 9 percent in the year through Sept. 30.

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