Year : 2011
This study uses descriptive and analytical methods with secondary data. It adopted the IS-LM framework to trace efforts of the subsidy removal on public revenue. It finds that two factors among others influence supply of and demand for subsidy in Nigeria. Supply is influenced by availability of revenue to finance the subsidy, while demand is influenced by the high poverty level in the country. It also finds that subsidy had crowded-out expenditures on other welfare programmes especially those under the 7points agenda. Furthermore, it was found that all other countries that had removed subsidy put in place safety nets to cushion the effects on the poor and to ameliorate purchasing power crisis. Meanwhile, required safety nets are not yet put in place in Nigeria, by implications this may impair the benefits derivable from the removal of the subsidy.