The Nigerian Government has announced that assumes that the subsidy on petrol is estimated at N6.72 trillion for full-year 2023, which they assured would be fully provided for.
This was disclosed by the Ministry of Finance at the Public Consultative Forum on the 2023-2025 Medium-Term Fiscal Framework, in a document viewed by Nairametrics.
The ministry also projected a second scenario whereby following the mid-2023 based on the 18-month extension announced in early 2021, only N3.36 trillion will be provided for fuel subsidy.
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What the Finance ministry is saying
The document which was presented by Mrs. (Dr.) Zainab Shamsuna Ahmed, the Honourable Minister of Finance, Budget & National Planning, stated that the projected fiscal outcomes in the medium term are presented under two scenarios based on the underlying budget parameters/assumptions, as follows:
Scenario 1 – the Business-as-Usual scenario: This assumes that the subsidy on PMS, estimated at N6.72 trillion for full year 2023, will remain and be fully provided for.
Scenario 2 – the Reform scenario: This assumes that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced in early 2021, in which case, only N3.36 trillion will be provided for.
Additionally, there will be tighter enforcement of the performance management framework for GOEs that will significantly increase operating surplus/dividend remittances in 2023.
The report stated that both scenarios have implications for net accretion to the Federation Account and projected deficit levels.
It revealed that Under Scenario 1, it projects the 2023 revenue at N6.34 trillion, out of which only N373.17 billion or 5.9% comes from oil-related sources, “the balance of N5.97 trillion is to be earned from non-oil sources”.
The second scenario assumes an aggressive implementation of cost-to-income limits of GOEs, With these, the 2023 FGN Revenue is projected at N8.46 trillion (15.1% or N1.51 trillion less than the 2022 Budget) but N2.12 trillion more than scenario 1.
