MPC: N1.9tr petrol subsidy expenditure hurts fiscal sustainability

The Federal Government’s N1.9 trillion seven-month expenditure on petrol subsidy has severe impact on the economy, especially on the country’s fiscal sustainability, a member of the Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC), Prof. Adenikinju Festus has said.

In his personal note at the last MPC Meeting in Abuja, he said petrol subsidy has been a perennial problem of the Nigerian economy and has gotten to a level where it is a danger to the country’s fiscal sustainability.

He said that between January and July 2022, Nigeria paid N1.9 trillion on subsidy that benefitted mainly the rich Nigerians, and the citizens and governments of neighbouring countries.

Another member of MPC, Robert Asogwa, said that fiscal risk remains elevated on the back of worsening government debt scenario with poor fiscal revenues similar to the situation at the last two MPC meetings.

According to his personal notes,  the CBN’s  staff half year economic review for 2022 showed a significant rise in government expenditure and an underperformance in revenue generation which increased the size of deficits and total debt stock.

Asogwa explained that as oil revenues decline further because of the increasing oil thefts in the Niger Delta region and with non- oil tax revenues still exhibiting sluggish growth patterns, the fiscal outlook became even more scary.

According to her, two other challenges of the economy relate to ballooning fiscal deficit and the associated unsustainable public debt (internal and external) and foreign exchange market crisis.

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