It’s wrong borrowing to fund fuel subsidy removal – CPPE

The Centre for the Promotion of Private Enterprise (CPPE) has described as strange and abnormal the decision by the Buhari Administration to borrow $800 million from the Word Bank to fund fuel subsidy removal palliative in June.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had after last week’s Federal Executive Council meeting disclosed that Nigeria had secured $800 million from the World Bank for post-fuel subsidy removal palliative for Nigerians.

According to her, over 50 million Nigerians in the social intervention scheme would be the beneficiaries of the funds.

Reacting to the development, Director General of CPPE, Dr Muda Yusuf explained that in the past, fuel subsidies did not involve borrowing, saying the practice had been that palliatives were funded from the savings from the subsidy removal.

Yusuf insisted that the fuel subsidy removal and palliatives should be left for the incoming Administration to handle.

“First, any conversation on subsidy removal and palliatives should be left for the incoming Administration.

“We have had subsidy-related palliatives, and none involved borrowing. The practice had been that palliatives were funded from the savings from subsidy removal, which makes the current proposition rather strange, ” he stated.

President Muhammadu Buhari had hinted at plans to remove fuel subsidies before the inauguration of the incoming government. Still, the Nigeria Labour Congress and other workers’ unions have heavily criticised this position.

Meanwhile the Budget Office of the Federation has alerted that Nigeria now has a “limited borrowing space” due to its poor debt-to-revenue ratio, stressing that “trouble” looms for the country if it exceeds its limits.

Director-General of the Budget Office, Ben Akabueze, while addressing members-elect of the 10th National Assembly at their week-long induction ceremony in Abuja on Wednesday, pointed out that while Nigeria remains healthy with its debt-to-GDP ratio, the country is not with its debt-to-revenue ratio.

Akabueze was speaking to the newly elected and returning members of the National Assembly, which is responsible for the consideration, amendment and passage of annual budgets of the Federal Government as well as economy bills like the Finance Bill.