Nigeria’s rising debt portfolio, which currently stands at a whooping N24.3 trillion, is supposedly sustainable. This is according to Mrs Zainab Ahmed, the country’s Minister of Finance.
According to a press statement issued by her Media Aide, the Minister argued that Nigeria’s public debt is lower than those of other countries such as Egypt, Angola, Brazil, and even neighbouring Ghana. For this reason, therefore, there is nothing to worry about as it can be sustained.
Note that Nigeria’s debt profile currently stands at 19 percent to the country’s Gross Domestic Product.
“IN THE BORROWING, WE ARE STILL AT 19 PER CENT TO GDP; OUR BORROWING IS STILL LOW.
“WHAT IS ALLOWED BY OUR FISCAL RESPONSIBILITY ACT IS THE MAXIMUM OF 25 PER CENT OF OUR GDP COMPARED TO OTHER COUNTRIES LIKE GHANA, EGYPT, SOUTH AFRICA, ANGOLA AND BRAZIL AND WE ARE THE LOWEST IN TERMS OF BORROWING.”
Recall that the Central Bank of Nigeria, CBN, earlier this year, raised an alarm over the country’s rising debt profile. The CBN Governor, Godwin Emefiele, specifically cautioned the Federal Government against this trend, saying that it is not healthy for the country’s economy.
No plans to remove fuel subsidy
Furthermore, the Minister of Finance disclosed that the Federal Government of Nigeria has no plans to remove fuel subsidy. According to her, the oil subsidy arrangement is more sustainable for the country, unlike what obtained before now.
“NNPC IS THE SOLE IMPORTER OF PETROLEUM PRODUCTS, AND SO WHEN THEY IMPORT IT IS THE COST OF BUSINESS AND THEY DEDUCT THAT COST BEFORE THEY REMIT THE LITTLE MONEY TO THE FEDERATION ACCOUNT. SO THAT IS COMPLETELY DIFFERENT.
“IT IS MORE COST EFFECTIVE, IT IS CHEAPER AND WHAT IS BEING DONE NOW IS EASIER TO MONITOR WHAT TRANSPIRED.
“WE ARE NOT THERE YET AND WE DISCUSS THIS PERIODICALLY UNDER THE ECONOMIC MANAGEMENT TEAM. BUT WE HAVE NOT FOUND A FORMULA THAT WORKS FOR NIGERIA AND YOU KNOW NIGERIA IS UNIQUE BECAUSE WHAT WORKS IN GHANA MAY NOT WORK IN HERE.
“SO, IT IS STILL WORK IN PROGRESS AND SO THERE IS NO INTENTION TO REMOVE FUEL SUBSIDY AT THIS TIME.”
Note that the issue of fuel subsidy has, for long, been a very delicate one in the Nigerian polity. While some people are against it, many Nigerians perceive it as the only substantial benefit they receive from the Nigerian Government.
Prior attempts by the Government to remove fuel subsidy was were met with resistance by the people. In January 2012 to be specific, Nigerians occupied Nigeria to protest yet another attempt to remove the subsidy.
Recently, the Managing Director of the International Monetary Fund (IMF) called on the Nigerian Government to remove fuel subsidy. According to Ms Legarde, doing this is important due to the low contribution of tax revenue to Gross Domestic Product (GDP).
The advice resulted in speculations about whether the subsidy would or not be removed removed. It is, therefore, a good thing that the Minister is putting an end to the rumours.