Page 8 - DMEA Week 29 2022

DMEA POLICY & SECURITY DMEA

Nigeria budgets $16bn

for subsidies in 2023

AFRICA THE Nigerian government has budgeted a total future government spending plans would
of NGN6.72 trillion ($16bn) for fuel subsidies in require more. “That’s why it’s important for us to
2023, but hopes to spend much less. consider this issue of removal of subsidies very
The announcement was made this week by seriously,” she said.
Minister of Finance, Budget and National Plan- The government anticipates that premium
ning Zainab Shamsuna Ahmed during a public motor spirit (PMS) or gasoline will require
consultation in Abuja. a subsidy spend of around NGN4 trillion
She said that the government had set the ($9.6bn), while the International Monetary
subsidy level because of issues with the deficit Fund (IMF) expects a level of around NGN6
and state oil firm Nigerian National Petroleum trillion ($14.6bn).
Corp.’s (NNPC) transition to a commercial busi- Minister of State for Budget and National
ness (see: Nigeria launches NNPC as commercial Planning Prince Clem Agba cautioned that if
entity, page 10). subsidies are not removed, the government may
Ahmed said: “The subsidy on PMS is esti- struggle to execute capital projects in 2023.
mated at NGN6.72 trillion for the full year 2023. “It’s a decision that Nigerians will have to take,
It will remain and be fully provided for by the because if you look at scenario one, it means that
NNPC on behalf of the federation.” we will not have any capital expenditure in 2023.
She added that the “petrol subsidy will remain There’ll be no capital expenditure at all, and tak-
up to mid-2023 based on the 18-month exten- ing care of recurrent expenditure will be a huge
sion announced early 2021, in which case only challenge with a scenario 2, where we’ll say let’s
NGN3.36 trillion [$8bn] will be provided for.” take it out to June. It means we only have about 1
Ahmed explained that “both scenarios have trillion left for capital expenditure,” he said.
implications for net accretion to the Federation “Unfortunately, all those who agree with our
Account and projected deficit levels. There will in-house that we should remove the subsidy; all
be tighter enforcement of the performance man- the political parties, the governors in the coun-
agement framework for government-owned try, the labour unions, NLC, TUC, party, you see,
enterprises (GOEs) that will significantly when they come up to the public, they will say
increase operating surplus/dividend remittances don’t remove the subsidy but behind the scenes,
in 2023.” when they see the books, they understand that it
She added that unless the subsidy is removed, has to be done,” he added.™

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