The federal government says a gradual removal of the petrol subsidy may start from April 2023, about three months ahead of the initial plan to effect a complete stop to the expenditure head.
Minister of Finance, Budget and National Planning, Zainab Ahmed stated this in a chat with newsmen on the sidelines of the World Economic Forum in Davos, Switzerland.
Zainab said the subsidy removal was the position of all contestants to the leadership of the country in their political campaigns for next month’s general elections.
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”.
After an 18-month extension, the Federal Government plans to spend N3.35 trillion on petrol subsidies from January till June 2023.
The extension, however, 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 further rise in the nation’s public debt which stood at N44.06 trillion as at end of September 2022.
According to the World Bank and the International Monetary Fund, the removal of 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.
Speaking in this regard, World Bank President, Mr 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.”
