It is not sustainable, President Muhammadu Buhari says, so he would stop paying the fuel subsidy in 2023.
Budgeted spending on gas subsidies is expected to hit N4 trillion this year and an additional N6.7 trillion in 2023.
On Friday, in Abuja, during his presentation of the projected 2023 budget to the national assembly, the president noted that, given the current budgetary effect, subsidy was no longer viable.
Earlier on Friday, President Buhari presented the National Assembly with a record-breaking N20.51 trillion appropriations bill for fiscal year 2023.
It is imperative that we maximize the effectiveness of our scarce resources even as we work to increase government revenue. The fuel subsidy will be eliminated in 2023 as previously indicated, and we are already implementing additional measures to lower the cost of governance.
To better manage the country’s few resources, Buhari has deemed it necessary to end the policy.
He did, however, mention that there would be other measures in place to soften the blow of the gas subsidy cut.
However, he added, “we are cognizant of the fact that lowering government spending too drastically would be socially destabilizing,” and therefore programs to support disadvantaged groups in society would continue to be implemented.
Since the 1980s, the subject of whether or not to subsidize the price of gasoline has been a contentious one in American politics. Its current fiscal consequence, however, makes it quite evident that the strategy cannot be maintained.
To mitigate the negative impact on some groups, “as a country, we must now face this issue taking cognizance of the necessity to offer safety nets,” the president said.