Utilise subsidy gains to fix economy, experts tell FG

An economist, Prof. Sherifdeen Tella, has urged the Federal and state levels of government to utilise petroleum subsidy gains to address their economic challenges, in order not to incur more debt from new loans.

According to the News Agency of Nigeria (NAN), Tella, who lectures at the Department of Economics, Babcock University, gave the advice in an interview with the  NAN in Lagos, on Monday.

President Bola Tinubu has formally requested the approval of the National Assembly to borrow $21.5 billion from external sources and issue a N757.98 billion domestic bond to address critical national needs.

These range from infrastructure and social services to the settlement of long-standing pension arrears.

The President’s letters, which were separately read during Tuesday’s plenary sessions in both chambers of the National Assembly, detailed a wide-ranging financing strategy aimed at revitalising key sectors of the economy.

Tella noted that the tiers of government’s plan to secure new loans amid petroleum subsidy removal gains was not convincing enough.

“Since the petroleum subsidy removal, the monthly allocation to the various tiers of government has drastically increased, so the gains should be used to address their needs.

“Therefore, the need for more loans should not arise immediately, without accounting for the current allocation,” Tella said.

He stressed that the country should be more innovative in fixing infrastructure, so as not to burden the economy with debt.

“The tiers of government should leverage private sector participation in addressing the infrastructural gap of the people.

“Just as it’s been done in other climes, where the government only issues guidelines and the private companies fund and manage them for a few years,” Tella said.

He emphasised that the tiers of government should embrace domestic resource mobilisation in fixing their developmental issues in the economy.

Also, Dr Ayo Teriba, Chief Executive Officer (CEO) of Economic Associates, has advocated for equity investment as one of the panaceas in fixing the infrastructural component of the economic challenges.

“Equity investment comes with transparency and rigor for accountability in the process.

“Its process is often prioritised before such investment is made, unlike the government which executes projects as they arise,” Teriba said.

He stressed that although there are alternative ways to fund the infrastructural gap, the government should give more clarity regarding the expected loans.

“The loan request is not clear enough, particularly in respect to the sub-national levels of government,” Teriba said.

NAN reports that the federal government has clarified that the external borrowing component of the 2025 budget, valued at $1.23 billion, has not yet been accessed and is scheduled for disbursement in the second half of the year.

The Federal Ministry of Finance disclosed this position on Wednesday in response to the formal request submitted by the President to the National Assembly on May 27, seeking approval for the 2024–2026 External Borrowing Rolling Plan.

According to the ministry, the Borrowing Rolling Plan should not be confused with actual borrowing for any given year.

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