Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said yesterday that the Federal Government was borrowing money to fund petrol subsidies, insisting that the subsidy regime had become totally unsustainable.
Ahmed, who disclosed this at the public presentation of details of the 2023 budget in Abuja, stated: “Fuel subsidy cost was a very high one; We have been funding it from borrowing.”
According to her, petrol subsidy will “remain up to mid-2023 based on the 18-month extension announced early 2022. In this regard, only N3.36 trillion has been provided for the PMS subsidy.”
The minister also said the reconciliation between the ministry and the Nigerian National Petroleum Company Limited, NNPCL, is still ongoing to determine crude oil revenues and what should accrue to the federation account.
On the controversial securitisation of the N22.7 trillion borrowing from the Central Bank of Nigeria, CBN, by Ways & Means, she said her team would engage the National Assembly (NASS) on the lingering disagreement between the two arms of government on the issues.
Debt securitization is the process of packaging debt(s) from a source or number of sources into a single security to be sold to investors.
The minister said the decision to securitise the debt was to reduce the burden on the Federal Government, as interest on the Ways & Means could hit N2 trillion this year, from N1.2 trillion, if nothing was done.
“If successfully securitized, rather than the current interest rate of MPR+3per cent (19.5%), interest on the Ways & Means, it would reduce to about nine per cent,” she said.
