The World Bank has maintained that for Nigeria to escape an existential threat, the country must remove its existing fuel subsidies.
The international financial institution warned that if the country failed to focus on other areas to boost its revenue, the already low revenue would continue to drop.
It noted that despite the rise in the price of oil in the international market, Nigeria had not reaped the benefits because of the huge amount spent on fuel subsidies.
The Senior Public Sector Specialist, Domestic Resource Mobilisation, at the World Bank, Mr Rajul Awasthi, made the submissions at a virtual pre-summit, with the theme ‘Critical Tax Reforms for Shared Prosperity’, organised by the Nigerian Economic Summit Group on Wednesday.
Awasthi explained that between 2015 and 2019, Nigeria’s non-oil revenues were among the lowest in the world and as a result the second lowest in spending, and that oil revenues were also falling even when oil prices were higher.
He stated, “Nigeria has the largest economy in Africa and the largest country in Africa by population, so it is critical to Africa’s progress. There is no doubt about that. But the government of Nigeria, from the public finance perspective, is really facing an existential threat. Let’s not downplay the situation. That is the actual reality.”
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said recently that the Federal Government might spend a whopping N6.72tn as fuel subsidy in 2023.
Also, the minister had consistently said the nation was facing revenue problems, compelling the FG to keep borrowing.
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The debt stock had risen to N41.6tn in the first quarter of 2022 with projections that it could peak at N45tn by the end of the year.
Nigeria is rated the fifth among the World Bank’s debtors, with $11.7bn debt stock as of June 30, 2021.
The minister also disclosed a few weeks ago that about 119 per cent of the country’s revenue was spent on debt servicing.
This implies that government has to borrow to meet its debt financing obligations.
The virtual event, anchored by the PwC’s Fiscal Policy Partner and Thematic Lead, NESG Fiscal Policy and Planning Thematic Group, Mr Taiwo Oyedele, was attended by several stakeholders, including the representative of the Manufacturers Association of Nigeria and the Executive Secretary of the Joint Tax Board, Mrs Nana-Aisha Obomeghie
