Nigerian Minister of Finance and Coordinating Minister of Economy, Wale Edun has explained the reason behind the disbursement of 2 billion naira to 36 States and Federal Capital Territory from the 5 billion naira subsidy removal palliative package.
Wale Edun who made this known when host Journalists to his first Press Briefing at Finance Auditorium, Abuja on Friday said the Federal Government had to hold back on the balance of N3billion to avoid a spike in inflation figures if the funds were released at once.
Recall that N5billion palliative package was announced by the Federal government to cushion the effects of petrol subsidy removal while the Minister added that the facility was a blend of grant and borrowing by FG to the 36 States and Federal Capital Territory.
He revealed that the fund was not part of the proposed $800 million World Bank loan to cushion the effect of the subsidy removal and explained that Federal Goverment cannot rely on borrowing to fund the National Budget.
Pointed out that the Federal Goverment will mobilise revenue from improved oil production to earn more forex and create the enabling environment for local and foreign investors to come in to create jobs and improve the economy.
Wale Edun anchored the economic plan of Tinubu’s administration on increasing revenue, effective debt management, and automation of revenue collection to plug leakages and create the enabling environment for private sector players to invest and flourish.
He said the last time the foreign exchange (FX) rate was stable, and interest rates were affordable, was a decade ago and a weak, depreciating exchange rate, as well as security concerns, resulted in an economy.
“If we think back to when was the last time when the economy was stable, when it was growing, when inflation was low, when the exchange rate was stable, and when interest rates were affordable; that period was about a decade ago,” he said.
The Minister noted that the economic growth was about 6 percent around 2013 to 2014 which he said was due to the worldwide commodity boom that began around 2010 adding that Oil prices were high; volumes were high.
According to him, “Nigeria earned and the government earned into its coffers over $80 billion per annum, compared to the figure now of around $25 billion. So you can see the difference. And what that points to is that there was a time when government had enough foreign exchange.
“It had enough naira revenue to meet its obligations and to provide the funding for growth of the economy. It had enough foreign exchange such that when people came in to invest and they needed to import raw materials, import machinery, government could provide the wherewithal.”
Edun advised the federal government to accommodate other sources of funding, such as foreign direct investment, as well as domestic investment by Nigerians in all areas. “We saw some of these things in Lagos. When Mr. President was governor of Lagos.
He emphasized that the President, Bola Tinubu when governing Lagos State opened up the Power sector to private investment, the road sector to private investment infrastructure, waste management, cemeteries to private investment, because his Govt did not have the funds.
“And the Private sectors were those who were willing and able to provide jobs and grow the economy by making those investments. So, that is a pointer to the fundamentals of the president’s strategy, there will be huge flows of foreign direct invests, once investors have the right conditions.
“Specifically, where are we headed, President Bola Ahmed Tinubu has pointed out, in priority areas where he is going to take Nigeria. And his key priorities are to improve the lives of Nigerians by providing food security and ending poverty”, he said.
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, who was also at the Press briefing, said the company would have gone bankrupt if gasoline subsidy was not removed by Bola Tinubu on resumption of office.
Kyari expressed happiness, saying government will start making more money soon following improved crude oil production, which he said was 1.7 million barrels as at Wednesday of this week due to removal of the petrol subsidy.