Fuel subsidy is once again turning into an issue because according to reports, the International Monetary Fund (IMF) has again advised the Nigerian Federal Government to do away with it, according to Mrs. Ahmed, the recommendation was given during the just concluded Spring Meetings in Washington DC, United States of America, USA. The Special Adviser to the Minister of Finance on Media and Communications, Mr Paul Ella Abe chief, made this known in a statement issued on Tuesday in Abuja.
According to the statement,
“NNPC is the sole importer of petroleum products, and so when it imports, its cost of transaction is deducted before remitting the little money to the federation account. So that is completely different.”
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The Minister of Finance, Mrs. Zainab Shamshuna Ahmed, therefore disclosed that Nigeria’s borrowing still stood at 19 per cent of the Gross Domestic Product (GDP), according to the Minister, this was low when compared to what Ghana, Brazil, South Africa, Egypt and Angola have borrowed.
The finance minister said,
“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.
While addressing issues relating to the planned fuel subsidy removal, the Minister maintained that it was not on the front burner at the moment. She said that contrary to the widely reported news of the government’s plan to remove the fuel subsidy, there was no immediate plans by the government to remove subsidy because the government was yet to come up with any plan in that direction.
“We are not there yet and we discussed 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 here.”
However, pertaining to the eventual removal of the fuel subsidy, she said that
“It is more cost effective; it is cheaper and what is being done now is easier to monitor what transpired.
“It hinders our ability to service all categories of expenditures including salaries, allowances, capitals as well as debts
“So what we are doing at the Ministry of Finance is concentrating and enhancing our revenue and collection capacities
“What we have is revenue problem and when revenues perform the aggregate rate of 55 per cent, it hinders the ability to operate in our budget.”