The Director General of the Budget Office of Nigeria, Ben Akabueze, says the trillions of naira spent on fuel subsidy can be deployed to other creative sectors, particularly education.
Speaking on Arise TV’s Global Business Report, Akabueze said the funds could be used to end the Academic Staff Union of Universities strike and increase the pay of government staff.
“The truth is that public servants need to be paid far better than they are now. It’s like the ongoing issue regarding ASUU and the pay for lecturers. I haven’t come across anyone in government who thinks that lecturers are adequately paid or who thinks lecturers should not be paid significantly more. The crux of the ASUU matter is the ability to pay. It is why this matter has dragged on because the government has refused to commit to a number that it does not have the ability to pay,” he said.
The Federal Government will likely spend N6.7tn on petrol subsidies in 2023 if it plans to pay for the whole year. The cost may reduce to N3.36tn if the subsidies if it remains up to mid-2023, according to the Finance Minister, Zainab Ahmed.
Akabueze noted that fuel subsidies often had a huge impact on the economy and the lives of the people, stressing that “when you eliminate fuel subsidies or cut back on it, there will be an immediate impact on people.”
He blamed the absence of investments in the midstream sector of Nigeria’s oil & gas industry on the existence of petrol subsidies, noting that where price was not market-driven, investors would be reluctant to commit.
On the matter of the suspension of the telecommunications tax, Akabueze said, “I don’t know about this suspension because this (tax) is now law. Beyond what I have read in the media, we haven’t been advised on the suspension.”
On the issue of whether Nigeria had a revenue or debt problem, he noted that Nigeria’s debt was not really in a bad shape.
“When you look at all the other indices of debt sustainability, our debt looks okay. This is till you get to the matter of debt-service-to-revenue. That’s where Nigeria looks really bad and where we are testing the limits of sustainability. What the Minister of Finance said is that we need to address this revenue problem quickly because if we do not, then we will be faced with a real debt crisis.”
On whether Nigeria could be forced to approach the International Monetary Fund for a bailout, Akabueze said he did not see Nigeria going to the IMF voluntarily.
“This is a hot potato issue here in Nigeria. But the honest truth is, if we don’t address our fiscal challenges, in a sensible and sustainable manner, we may end up unwillingly approaching the IMF,” he cautioned.
On the Central Bank of Nigeria’s Ways & Means financing of the Federal Government, which rose to N19.9tn in June 2022 and the Asset Management Corporation of Nigeria’s N5 trillion toxic assets, the DG said both were crucial debt issues that the government must make priorities.