High stakes for inflation, instability, and subsidies
After years of wasteful expenditure that exceeded N3 trillion last year alone and a growing budget imbalance, Nigerians will vote in February to determine the future of subsidies, even as inflation keeps pushing many into poverty.
With 53 days to the general elections, Nigerians will decide at the polls who makes important economic choices for the next four years as the world continues to face issues that continue to put doubt on the country’s claims of economic recovery.
Politicians and Nigerians have realized that subsidies are no longer viable due to the program’s ineffective management after years of discussion and unrest.
Stakeholders predict that the ongoing gasoline shortage will likely become worse in the next year as global supply becomes problematic and the present government prepares for elections.
Leading contenders for the 2019 elections have already said that they want to end gasoline subsidies without outlining any countermeasures to prevent inflationary effects on Nigerians.
Even though the country’s inflation rate is 21.5%, many experts believe it has not peaked yet since local prices continue to include import pass-through charges. Inflation levels are predicted to increase if subsidies are removed unless extraordinary efforts are done to mitigate the dangers.
There are worries that without increased local production and access to essential raw materials for the industrial sector, Nigeria’s food import bill would continue to climb as investors remain on edge and many farmers stay away.
In a similar vein, there are concerns that the Federal Government’s determination to investigate new avenues for revenue-raising through tax reforms may stifle the private sector, amid worries that no amount of tax revenue will be able to finance the extent of fiscal irresponsibility displayed by the executives, if the cost of governance is not addressed, even as debts mount.
In order to fill funding shortfalls, the government now defaults to taking on debt, which raises questions about its ability to repay the debt and executive abuse. Nigeria’s budget deficit is anticipated to exceed N12 trillion for the year thanks to fresh loans, increased subsidy costs, and debt financing.
The Senate rejected President Buhari’s proposal to restructure the N22.7 trillion Ways and Means advances that the Central Bank of Nigeria (CBN) had granted to the Federal Government, but it did approve that the Federal Government should obtain the N819.5 billion from the N1 trillion it was asking the apex bank for in order to fund the 2022 supplemental budget.
