Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said yesterday that the Federal Government was borrowing money to fund petrol subsidies, insisting that the subsidy regime had become totally unsustainable.....KINDLY READ THE FULL STORY HERE▶

Ahmed, who disclosed this at the public presentation of details of the 2023 budget in Abuja, stated: “Fuel subsidy cost was a very high one; We have been funding it from borrowing.”

According to her, petrol subsidy will “remain up to mid-2023 based on the 18-month extension announced early 2022. In this regard, only N3.36 trillion has been provided for the PMS subsidy.”

President Muhammadu Buhari’s administration had announced plans to end subsidy from July 2022 but changed its position when faced with threats of nationwide protests by labour.

Party members and some officials of the administration were said to have convinced President Buhari that the decision will negatively affect his public rating and that of the ruling party and this forced the government to later announce an extension of the subsidy regime to lapse in June this year, one month after leaving office.

The minister also said the reconciliation between the ministry and the Nigerian National Petroleum Company Limited, NNPCL, is still ongoing to determine crude oil revenues and what should accrue to the federation account.

On the controversial securitisation of the N22.7 trillion borrowing from the Central Bank of Nigeria, CBN, by Ways & Means, she said her team would engage the National Assembly (NASS) on the lingering disagreement between the two arms of government on the issues.

Debt securitization is the process of packaging debt(s) from a source or number of sources into a single security to be sold to investors.

The minister said the decision to securitise the debt was to reduce the burden on the Federal Government, as interest on the Ways & Means could hit N2 trillion this year, from N1.2 trillion, if nothing was done.

“If successfully securitized, rather than the current interest rate of MPR+3per cent (19.5%), interest on the Ways & Means, it would reduce to about nine per cent,” she said.

On the macro-economy, she said the economy had been fully diversified, with oil revenue projected to contribute only N2.29 trillion (22 per cent of revenue) to the budget in the current fiscal year.

She said: “In aggregate, 22% of projected revenues is expected from oil-related sources, while 78% is to be earned from non-oil sources. This shows that we have achieved a fully diversified economy in this country.”

Non-oil taxes are estimated at N2.43 trillion; Federal Government independent revenues are projected to be N2.62 trillion; while other revenues total N762 billion.

Meanwhile, public debt, (owed by federal and state governments and FCT) could rise to about N70 trillion at the end of the year.

With public debt already standing at N44.06 trillion as of the end of September 2022, the Director-General of the Debt Management Office, Ms Patience Oniha, said that if efforts to securitise the Ways & Means were successful, N22. 7 trillion would be added to the public debt in a transparent manner.

She added that the projected 2023 borrowings to fund the deficit could push up the estimated figure.

The D-G added that for the nation’s debt stock to decrease, revenue discussions must take the centre-stage with a view to ramping up that aspect of the budget.