Fuel subsidy removal caused a substantial 29.05% increase: NESG

The removal of fuel subsidies in May 2023 fueled a significant financial shift, propelling the Federal Accounts Allocation Committee (FAAC) to disburse an unprecedented N15.1 trillion in 2023.
The remarkable surge reflects a substantial 29.05% increase from the previous year, as highlighted by the Nigerian Economic Summit Group (NESG) macro-economic outlook for 2024.
Between January and May 2023, FAAC revenue reached N5.2 trillion, with a notable uptick between June and December, totalling N9.9 trillion.
Despite the commendable revenue growth, the NESG report scrutinises the federal government’s revenue performance, pointing to a 31.7% expenditure underperformance.
The report also raises concerns about the escalating debt service, which constitutes 45.6% of total expenditure and a staggering 80.9% compared to revenue. Additionally, the critique extends to the allocation of only 11.6% of revenue to capital expenditure.
Questioning the efficacy of the Central Bank of Nigeria’s (CBN) inflation-fighting measures, the NESG report highlights four interest rate hikes in 2023, resulting in an increase from 16.5% in December 2022 to 18.75% by the end of 2023. Paradoxically, inflation continued its upward trajectory, reaching 28.9% by December 2023.
The report also underscores the impact of the fuel subsidy removal on government revenues, with Nigeria spending approximately N4 trillion on fuel subsidies in 2022 and N3.36 trillion in the first half of 2023.
President Tinubu’s decisive move led to a significant revenue boost, prompting the establishment of the Infrastructure Support Fund (ISF) in June 2023.

Source: allnewsng.com

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