Uche Usim, Abuja
Responding to concerns over Nigeria’s bloating debt portfolio of N24.3 trillion, Minister of Finance Mrs Zainab Shamshuna Ahmed on Tuesday said that the country’s borrowings are at safe margin, stating that Debt to GDP ratio currently stands at 19 percent.
The minister said the figure was relatively low compared to countries like Ghana, Brazil, South Africa, Egypt and Angola.
She made the statement while clearing the grey areas on the purported fuel subsidy removal, insisting that there was no such plan by the government, but was a recommendation by the International Monetary Fund (IMF) at the just concluded Spring Meetings in Washington DC, United States of America, USA.
According to Ahmed, subsidy payouts in the Buhari administration differs different from previous administrations where fuel subsidies were paid to oil marketers.
“But this time around, NNPC is the sole importer of petroleum products and so when they import it is the cost of business and they deduct that cost before they remit the little money to the Federation Account. So that is completely different.”
She added that, “It is more cost effective, it is cheaper, and what is being done now is easier to monitor what transpired.
“In the borrowing, we are still at 19 percent to GDP. Our borrowing is still low. What is allowed by our Fiscal Responsibility Act is the maximum of 25 percent of our GDP compared to other countries like Ghana, Egypt, South Africa, Angola and Brazil; and we are the lowest in terms of borrowing.
Ahmed acknowledged the challenge of revenue generation in the country.
“What we have is a revenue problem and when revenues perform the aggregate rate of 55 percent it hinders the ability to operate in our budget.
“It hinders our ability to service all categories of expenditures, including salaries, allowances, capitals as well as debts.”
“So what we are doing at the Ministry of Finance is concentrating and enhancing our revenue and collection capacities,” she stated.
The minister assured Nigerians that there is no intention of fuel subsidy removal as reported by the media, saying that the federal government has not made any such plans.
“We are not there yet, and we discuss this periodically under the Economic Management Team, but we have not found a formula that works for Nigeria; and you know Nigeria is unique because what works in Ghana may not work in here. So, it is still work in progress, and so there is no intention to remove fuel subsidy at this time,” she assured.