Nigeria facing unprecedented budget deficit, surging inflation says EIU

Analysts at the Economist Intelligence Unit, EIU say Nigeria’s fiscal situation will worsen considerably this year under the weight of soaring energy prices which should otherwise have been a blessing, with budget deficit rising to six per cent of gross domestic product, GDP and inflation surging past sixteen per cent.

Nigeria’s current oil production level is now half what it was in 1992, hobbled by a woeful management of the industry by government.

Shell, the anglo-dutch energy giant which produced about 900,000 barrels of oil in 1992 has seen its production fall to a mere 200,000 barrels today.

According to the report, “Nigeria is encountering a mini-crisis regarding petrol. In early February the authorities withdrew adulterated petrol from circulation, after it emerged that an unsanctioned blend was causing the breakdown of motor vehicles and shutdowns of emergency power-generation equipment.

The precarious situation of the continent’s largest economy is also a drag of the growth of the private sector and a pain in the neck of ordinary Nigerians.

Brent crude oil prices breached the $130/barrel mark in early March, raising the prices of fuel products like diesel and petrol in tandem.

Most Nigerian firms and businesses rely on stand-by diesel generators for electricity supply.