The Minister of Finance, Budget and National Planning, Zainab Ahmed has said that the Federal Government sometimes borrows funds to buy petrol amid the rising fuel subsidy bills.
Zainab, who made this known on Tuesday on the sidelines of the World Economic Forum in Davos, while speaking during an interview with Arise TV, also confirmed that there was a possibility of global economic recession this year.
However, the Minister stressed that Nigeria’s foreign exchange reserves were healthy enough to withstand the shocks as a result of the expected recession.
During the interview monitored by VANTAGE NEWS, the minister further added that despite the huge subsidy spending on the commodity, the Federal Government at some point had to borrow funds to buy Premium Motor Spirit, popularly known as petrol.
The Minister while insisting on putting an end to the fuel subsidy regime, stated that it would be a gradual process expected to begin from the second quarter of 2023 by the president Muhammadu Buhari-led administration.
She said, “We also have to exit fuel subsidy, because that is also a very significant contributory factor. You can look at it in two ways – it is revenue that would have come to the government but it doesn’t because it has been spent on fuel subsidy.
“But also, where there is nothing for the government to buy the refined petroleum products, we have to borrow to buy the petroleum products. So if you take that out, that’s about N3.25tn, that is a significant relief.”
The Minister insisted that removing the fuel subsidy as scheduled for June last year would have had a severe impact on the economy owing to the lingering impact of COVID-19 and the rising inflation in the country.
She added, “Removal of fuel subsidy at that time would have increased the burden on the citizens, and the President does not want to contemplate a situation where measures are taken that further burdens the citizenry.
“So the decision was to extend the period from June 2022 to 18 months, beginning from January 2022. So in June 2023, we should be able to exit. The good thing is that we hear a consistent message that everybody is saying this thing needs to go and that it is not serving the majority of Nigerians.
“I listened to some of the new leaders campaigning for the next round of leadership in the country and they are saying they will get rid of it very quickly.”
Disclaimer
Comments expressed here do not reflect the opinions of Vantage News Nigeria or any employee thereof.
