The Nigerian Economic Summit Group says fiscal crisis looms Nigeria on account of huge spending on fuel subsidy which has now increased to N2.04trillion
It conveyed its concern in the September 2022 report titled, “The State of Nigeria’s Economy,” made available to journalists in Abuja .
The group observed that the Federal Government’s huge fuel subsidy spending had been a drain on the country’s revenue despite the rise in crude oil prices in 2022.
It added: “In line with historical precedent, Nigeria’s fiscal space has been largely unimpressive, primarily on the revenue alongside a growing fiscal deficit.Despite an increase in global oil prices, the Federal Government’s actual revenue (N1.63tn for January – April 2022) is short of the pro-rated budget (N3.32tn), while government spending (N4.72tn for January – April 2022) was significantly closer to the budgeted levels (N5.77tn for January -April 2022).”
The group advised the government to reduce its fiscal deficit to avert an impending fiscal crisis, highlighting the gradual withdrawal of fuel subsidy as one of the measures to achieve this.It also emphasized the need for government to embark on the gradual phasing out of the fuel subsidy programme,stressing that sustaining the programme was disastrous.
It added: “Aside from taking a clear position on the fuel subsidy issue, the Federal Government must begin the shutting down phase of subsidy programmes to save the country from impending fiscal crisis.Understandably, this suggestion will affect the welfare of the citizens, but it is only in the short term. On the other hand, the more extended effects of sustaining this programme are disastrous.