Minister of finance, budget and national planning, Zainab Ahmed, has said the federal government is struggling to meet its debt service obligations.
The Minister blamed the situation on rising cost of petrol subsidy. This year alone, NNPC has spent N947.53 billion on petrol subsidy payments.
The World Bank, in its Nigeria’s Development Update (NDU), launched on Tuesday, projected that fuel subsidy would gulp N5 trillion in 2022 — more than Nigeria’s N4 trillion subsidy budget.
“With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to 5 trillion Naira in 2022,” the report reads.
Speaking at the hybrid launch of the World Bank’s report, the finance minister urged Nigerians to understand that petrol subsidy is causing a massive fiscal burden, thus impeding the country’s economic growth.
She said important investments in the oil and gas sector are being delayed because of the heavy fiscal burden of fuel subsidies.
“This premium motor spirit (PMS) subsidy is costing us an additional N4 trillion than was originally planned. So, this is an unplanned deficit,” Ahmed said.
“We have gone to the National Assembly; we have gotten approvals, but the approval was simply for us to cut down on some of the investment costs.
“So, investments that we needed to make in oil and gas sector which we are delaying and deferring to a later time and reducing the rollout of those investments. But we also had asked that we needed to borrow more which is very serious.
“Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation.
“So Nigerians need to understand that this PMS subsidy we are carrying now is hurting the nation, it’s impeding the government’s ability to be able to invest in human capital development.”
According to her, the N4 trillion earmarked for payment of fuel subsidy this year could have been invested in the health or education sector.