Removal of subsidies: FG urged to prepare Nigerians for rising fuel prices

Zainab Ahmed, Minister of Finance

The Federal Government has been urged to prepare Nigerians for the rising fuel prices that will follow the removal of the gasoline subsidy in 2023.

This is the result of two online polls conducted recently by Arise TV.

Respondents were asked on Twitter and YouTube whether it was up to the government, economic think tanks, the media and trade unions to prepare Nigerians for post-subsidy fuel prices.

Forty-four percent pointed the finger at the government, while 43 percent said it was each person’s responsibility.

Responding to the survey, PwC Nigeria Partner and Chief Economist Dr Andrew Nevin said, “There needs to be some communication with Nigerians about planning for what is going to be a major shift.

Coronation Merchant Bank’s chief economist, Chinwe Egwim, also responded to the survey, saying a collective effort was needed from the government’s perspective in terms of policy reform “and the media as one of the most powerful tools. more powerful people who can communicate change and articulate the right message to support the necessary adjustments to a post-fuel subsidy in Nigeria.”

The Chief Economist of the Development Bank of Nigeria, Professor Joseph Nnanna, said: “Economic think tanks have a role to play in explaining the economic implications for Nigerians, especially those at the bottom of the pyramid”.

CFG Advisory managing director Tilewa Adebajo said it was basically the government’s job.

“If the government does not take the lead, it will not work. We don’t have enough income to service our debts. Our income is down because we are paying grants and NNPC has paid little or nothing to the Federation’s account.

“The government is violating the Fiscal Responsibility Act. If there is no political will from the government, we will still be talking about fuel subsidies next year.

Dwindling national fortunes have weighed heavily on the economy, with the government suggesting tougher fiscal times are ahead in 2023 if fuel subsidies are maintained.

Read also: The DG of Customs denounces the N6trn fuel subsidy

Finance and National Planning Minister Zainab Ahmed said the government’s budget deficit is expected to top 12.42 trillion naira if oil subsidies are maintained through the entire 2023 budget cycle.

Ms. Ahmed revealed this during her appearance before the House of Representatives Finance Committee to defend the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

She said the federal government plans to borrow more than 11 trillion naira and sell domestic assets to finance the budget deficit in 2023.

Nigeria’s revenue to GDP ratio is 9%, while Ghana’s is 13%. Nigeria has seven times the population of Ghana which has 31 million.

According to the Debt Management Office, Kenya and Angola have revenue to GDP ratios of 16.6% and 20.9% respectively.

Nigeria also does not collect enough taxes as its tax to GDP ratio is 9%, the lowest recorded in 2016 (5.3%).

But the average of the 30 African countries in the 2021 Africa Income Statistics was 16.6%.

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