Amaechi: There’s No Fuel Subsidy in the Budget
Amidst speculations and reports on the removal of petrol subsidy this year, the Minister of Transportation, Hon. Chibuike Rotimi Amaechi, yesterday confirmed the removal of subsidy on petrol, saying it was not included in the 2016 budget.
He said this at the Business Eye Roundtable discussion in Lagos.
Amaechi, who was among the panelists, said this was part of the policies and steps taken by the federal government to stem the bleeding of the economy.
He said: “For the federal government, if you know the president, he doesn’t support borrowing but he has catapulted to borrowing. If you know the president, he doesn’t support removal of subsidies, we are not saying it but you know it is there.
“We are not saying oil subsidy has been removed, but check it in the budget; it is not there so where would he pay from? And if you know the president very well he would not spend anything outside the budget.”
The minister added: “I am one of the vocal ministers who can say it has been removed but I am just saying it is not in the budget.”
Amaechi’s statement came as a reaction to the Chief Executive Officer, RTC Advisory Services Limited, Mr. Opeyemi Agbaje who urged the federal government to put in the right polices which would tackle the economic deficits in the country.
Agbaje said: “My fear is that in government itself, there is insufficient realism around the real problem. I don’t think polices are right. They are not dealing with the reality of problem.
“I think the mind-set has not fully accepted the ramifications of the economic dimensions of the problem. The federal government needs to be bold, tell Nigerians the truth, face the issues around how we can get investments into this economy, and subsidies and spending.”
On his part, the Managing Director/ Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, urged the federal government to reduce uncertainty, be consistent in its policies, create incentive to investors, not to penalise people willingly and also be competitive in attracting investors.
Commenting on the state of the economy, Rewane said: “When you are in this kind of situation, you must spend your way out. The budget is projecting 25 per cent increase in expenditure, a deficit of 2.2 trillion with the multiplier effect and borrowing internally N900 billion and externally $4.5 billion another N900 billion. Subsidies would go therefore because of that, the fiscal strategy is intact what is missing is the monetary policy strategy.
“The truth on the exchange rate policy when the price of oil was $114 cannot be the same exchange rate policy when the price of oil is $30. Exchange rate policy and interest rate policy, when the yield was $91 a barrel cannot be the same when the yield is $5 a barrel. Every currency in the world is in turban and Nigeria cannot be anywhere different. Therefore, what you need to do is come up with a set of parameters and variables.”
Further on the exchange rate, he said: “You cannot deal with an exchange rate that is inefficient. Three things that are important to look at are the terms of trade which are negative at this time but they would change for the better, our trade balance is negative and you make up by investors bringing in money and more important, Nigeria is number seven in the world of the countries that have the highest remittance Diaspora. Nigerians Diaspora have $21billion a year and what we are looking for, $21 billion a year can cover it. So all you need is the confidence of your own people to bring their money home then foreign investors would follow.”
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