—-Lawmakers approve ₦1.2 trillion in additional domestic borrowing
November 14, 2025/CSL Research
Authorities have suspended the planned implementation of the 15% import duty on petrol and diesel, marking a significant policy reversal just weeks before it was due to take effect. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced the suspension yesterday and assured the public that petroleum product supplies remain sufficient to meet domestic demand through the festive season. This followed earlier concerns that the tariff could disrupt supply flows. Although no official reason was given for the decision, we believe it reflects pushback from petroleum marketers and certain industry stakeholders, who warned that the import duty could lead to short-term increases in fuel prices. The suspension therefore offers immediate relief to consumers, preventing a potential hike in pump prices already averaging about ₦920 per litre in recent weeks and reducing the risk of fuel shortages during the year-end festive period.
The suspension of the 15% import duty carries several drawbacks, though it remains unclear whether the pause is temporary or permanent. We note that a permanent suspension would deprive the government of a potential revenue stream, which we estimate could contribute roughly 0.4% of GDP to fiscal revenues next year. Moreover, it may also send mixed signals to investors about the consistency of downstream sector reforms and weaken efforts to support domestic refining, particularly as output ramps up at the Dangote Refinery.
That said, we think the government may revisit the measure in 2026, once domestic refining capacity has grown further, and the market is better positioned to absorb cost adjustments without risking fuel shortages or undermining affordability.
In another development, lawmakers have approved an additional ₦1.2 trillion in domestic borrowing to address the widening financing gap in the 2025 budget. This decision aligns with our earlier guidance (see CSL H2 2025 Outlook Report: “Between stabilisation and strain”, 8 July), where we highlighted the likelihood that the 2025 fiscal deficit would exceed initial projections due to weaker than expected oil revenues and delays in implementing new tax measures.
As such, we had anticipated that the government would turn to larger-than-planned domestic borrowing to close the gap. With inflation expected to continue its downward trend through November and the Central Bank of Nigeria (CBN) likely to cut interest rates later this month, we do not expect the additional borrowing to cause major disruptions to the yield curve. Overall, we maintain our outlook that the fiscal deficit could widen to around 4.2% of GDP this year, up from 3.6% in 2024.
Click here to download full report: CSL Nigeria Daily – 14 November 2025 – Economy.pdf
