- To be disbursed to 10 million households
- Funding budget with borrowings responsible for Nigeria’s N46.25trn debt – DMO
BY FESTUS OKOROMADU, ABUJA
The Federal Government has secured $800m from the International Bank for Reconstruction and Development (the World Bank), to provide post-petroleum subsidy palliatives for over 50 million Nigerians ahead of June 2023.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed this to State House Correspondents on Wednesday, after this week’s Federal Executive Council chaired by President Muhammadu Buhari at the Aso Rock Villa, Abuja.
According to Ahmed, the $800m funds for the first tranche of palliatives are ready to be disbursed to 10 million households in form of cash.
“There’s a provision (of the Petroleum Industry Act) that says 18 months after the effectiveness of the PIA that all petroleum products must be deregulated. That 18 month takes us to June 2023.
“Also, when we were working on the 2023 Medium Term Expenditure Framework and the Appropriation Act, we made that provision to enable us to exit fuel subsidy by June 2023.
“We’re on course, we’re having different stakeholder engagements, and we’ve secured some funding from the World Bank, which is the first tranche of palliatives that will enable us to give cash transfers to the most vulnerable in our society that have now been registered in a national social register.
“Today, that register has a list of 10 million households. 10 million households are equivalent to about 50 million Nigerians,” she said.
When asked how much funding the Federal Government received from the World Bank, the Minister said “$800m for the scale-up of the National Social Investment Programme at the World Bank. And it’s been secured, it’s ready for disbursement.”
However, she noted that the Federal Government must raise more resources to enable it to do more than cash transfers.
According to her, wide-ranging negotiations are underway to deploy non-cash palliatives such as a “mass transit” system for workers’ daily commute.
“So there are several things that we’re still planning and working on, some we can start executing quickly, some are more medium-term implementation.
“There are a lot of discussions going on at different levels, including with members of the transition committee of the incoming government,” she said.
While briefing State House Correspondents on Tuesday, March 28, Minister of Labour and Employment, Chris Ngige, said the incoming administration of Bola Tinubu would bear the brunt of providing palliative measures for millions of Nigerians ahead of the discontinuance of petrol subsidy in June 2023.
“The subsidy palliatives will be left to the incoming government to implement. We’ll simply handover to them. Of course, we will give recommendations which they are at liberty to either accept or reject,” he said.
Meanwhile, the Debt Management Office has attributed the growing debt stock of Nigeria’s economy to running the country’s budget on deficit over the years.
Director-General, Patience Oniha, who disclosed this on a live television on Wednesday, said the Federal Government is responsible for 85 percent of the N46.25 trillion total debt portfolios.
She explained that several loans have been contracted from multilaterals and bilateral sources while the Federal Government keeps issuing promissory notes to settle obligations for which it doesn’t really have the revenue.
The debt management boss insisted that borrowing was an accepted form to fund government activities but stressed the need for expansive revenue generation.
She noted that when money borrowed are judiciously utilised to stimulate growth, revenue will be generated to offset the debt.
“Nigeria’s debt stock is N46.25trn. It includes the debt of the 36 state governments and the Federal Capital Territory. The Federal Government is responsible for 84 percent to 85 percent of this,” she reiterated.
Oniha further explained that the nation’s debt stock was growing because Nigeria has been running a budget deficit for many decades.
In good and bad times with oil prices we have borrowed. We’ve been running budget deficits and those deficits are funded largely 85 percent to 95 percent from borrowing and that is cumulative. These are publicly available data.
“As we borrow each year, it adds up. So, the annual budget deficits are a major component. If you look at this year’s budget size is N21trn, borrowing is N10trn.
“The third part – government has been issuing promissory notes to settle obligations for which it doesn’t really have the revenue. So, that is why the debt stock has been growing,” Oniha revealed.
