…Subsidy to remain until mid 2023.
Nigeria’s minister of finance, Budget and national planning, Mrs. Zainab Ahmed, has confessed that, all the while, the country has been borrowing in other to meet petroleum subsidy needs, until now that the regime is no longer sustainable
At a forum in Abuja yesterday where she presented details of the 2023 national budget, Ahmed, said: “Fuel subsidy cost was a very high one; “We have been funding it from borrowing.”
According to her, petrol subsidy will “remain up to mid-2023 based on the 18-month extension announced early 2022. In this regard, only N3.36 trillion has been provided for the PMS subsidy.”
President Muhammadu Buhari’s administration had announced plans to end subsidy from July 2022 but changed its position when faced with threats of nationwide protests by labour.
Party members and some officials of the administration were said to have convinced President Buhari that the decision will negatively affect his public rating and that of the ruling party and this forced the government to later announce an extension of the subsidy regime to lapse in June this year, one month after leaving office.
The minister also said the reconciliation between the ministry and the Nigerian National Petroleum Company Limited, NNPCL, is still ongoing to determine crude oil revenues and what should accrue to the federation account.
On the controversial securitisation of the N22.7 trillion borrowing from the Central Bank of Nigeria [CBN], by Ways & Means, she said her team would engage the National Assembly (NASS) on the lingering disagreement between the two arms of government on the issues.
Debt securitization is the process of packaging debt(s) from a source or number of sources into a single security to be sold to investors.
The minister said the decision to securitize the debt was to reduce the burden on the federal government, as interest on the Ways & Means could hit N2 trillion this year, from N1.2 trillion, if nothing was done.
“If successfully securitized, rather than the current interest rate of MPR+3per cent (19.5%), interest on the Ways & Means, it would reduce to about nine per cent,” she said.
On the macro-economy, she said the economy had been fully diversified, with oil revenue projected to contribute only N2.29 trillion (22% of revenue) to the budget in the current fiscal year.
She said: “In aggregate, 22% of projected revenues is expected from oil-related sources, while 78% is to be earned from non-oil sources. This shows that we have achieved a fully diversified economy in this country.”