EKO HOT BLOG reports that President Muhammadu Buhari’s government has announced it will begin the gradual removal of the petrol subsidy in the second quarter of 2023.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed this in her report, highlighting the sidelines of the World Economic Forum in Davos, Switzerland.
This online media platform understands that the federal government’s initial plan was to commence the subsidy removal in June following an 18-months extension. Ahmed noted that the petrol subsidy removal will now begin April 2023, about three months ahead of the initial plan to effect a complete stop to the expenditure head.
According to her, subsidy removal appears to be the position of all presidential candidates seeking to succeed the incumbent government.
She stated: “What will be safer is for the current administration to, maybe at the beginning of the second quarter, start removing the fuel subsidy, because it’s more expedient if you remove it gradually than to wait and move it all in one big swoop”.
The government had budgeted an expenditure of N3.35 trillion on petrol subsidies for January through June 2023, but the development had generated widespread debate on the expediency of such expenditure as it will increase the budget deficit of the FG, which would be financed through additional borrowing and hence the further rise in the nation’s public debt which stood at N44.06 trillion as at the end of September 2022.
According to the World Bank and the International Monetary Fund (IMF), removing fuel subsidies is one of the fiscal reforms urgently needed to lift Nigeria’s development outcomes, which are severely constrained by the inefficient use of resources.
Earlier in his remark, World Bank President, David Malpass, said: “Nigeria’s government urgently needs to strengthen fiscal management, create a unified, stable market-based exchange rate, phase out its costly, regressive fuel subsidy and rationalize preferential trade restrictions and tax exemptions.”
Malpass noted this while commenting on a World Bank report launched in November last year, titled: “Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustained Results.”
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