SUBSIDY AND MACROECONOMIC PERFORMANCE IN NIGERIA

This study explores how government subsidies affect Nigeria’s overall economic performance, particularly focusing on their influence on economic growth and inflation. Over the years, Nigeria has grappled with high inflation, unemployment, and sluggish economic progress, despite being Africa’s largest economy. In an effort to address these challenges, subsidies have been widely used — especially in sectors like fuel, agriculture, and energy. However, these interventions have sparked debates due to their financial burden on the government and their long-term economic implications. Using data from 1981 to 2023, the study employs the Auto-Regressive Distributed Lag (ARDL) model to evaluate the impact of subsidy policies on Nigeria’s real GDP and inflation rate. The findings show that while subsidies can boost economic activity in the short run, their long-term benefits are often undermined by inefficiencies, inflationary pressures, and resource misallocation. In particular, subsidy removal tends to cause a short-term rise in inflation, though it may support fiscal stability and economic growth over time if well- managed