October 26, 2021

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FG targets N900bn for petrol subsidy in 2022

The federal government is targeting to spend N900 billion on subsidizing petrol next year.

This is as it plans to spend about N13.91 trillion as budget for the 2022 fiscal year.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, stated this on Thursday at the 2022-2024 Medium Term Expenditure Framework /Fiscal Strategy Paper (MTEF/FSP) public presentation, adding that the projected budget will have a deficit of 3.05 percent.

“The total budget size will be 11.907tr but when you add the government owned enterprises, it moves to N13.91tr. This is compared to the N13.58tr for 2021. Then in 2023 the budget size moves to N15.45tr and N16.77tr in 2024. For 2022 we will have a fiscal deficit that is 3.05%. This is just 0.5% higher than what is in the Fiscal Responsibility Act. It is also an improvement on the 3.93% that is in the 2021 appropriation,” she stated.

She indicated that “the financing items for the budget will include proceeds for the privatization, drawing multilateral/bilateral loans and new borrowings from both domestic and local markets to fund the deficit of N5.622tr in the 2022 budget and a similar amount in the 2023 budget. Borrowing will be 50% local and 50% international.”

The Minister also said Nigeria may spend N900bn on fuel subsidy in 2022 if the federal government continues to subsidize Premium Motor Spirit otherwise known as petrol.

“We must get rid of the subsidy because Nigeria is subsidizing petrol for the whole region. The price of the product is $500 in some Africans countries. There are few people that can afford cars in Nigeria while some have two. The poor people that should benefit from government interventions, at most, use public transport to get to their destination. So, the subsidy does not affect them in any way.”

She stated that the federal government is mulling the introduction of an initiative to provide succour for those that would be affected with the subsequent removal of the subsidy.

“The transition is not an easy one if we have to remove the subsidy. What are the alternatives? What can we provide for citizens? So we are projecting if we’ll be paying at least N900 billion in subsidy for next year. Imagine what we could have done with that amount.

“How many schools can you build? How many healthcare centres? It is not wise, it is not wise because we are hurting our economy,” She noted.

Director General of Budget and National Planning, Ben Akabueze, noted that with public presentations made, it would facilitate the early presentation of the 2022 budget to the National Assembly by the president in September.