Finance Minister, Minister Zainab Ahmed, on Tuesday, disclosed that the Nigerian government plans to raise $2.2 billion this month from the money raised in Eurobond sale in 2021 and target more local borrowing in 2022 to help fund Nigeria’s fuel subsidy as oil prices rise.
Ahmed said the country will not tap the Eurobond market this year.
“Rising oil prices has put us in a very precarious position because we import refined products and it means that our subsidy cost is increasing,” Ahmed said while answering questions from journalists at the Arab-African conference in Cairo, Egypt.
Petrol subsidies cost Nigeria up to $7 billion a year in revenue. Nigeria’s government led by President Muhammadu Buhari in January 2022 reversed a pledge to end its subsidies then, and instead extended it by 18 months to avert any protests in the run-up to presidential elections in 2023.
But the price of oil has soared. The West African country depends almost entirely on imports to meet its domestic gasoline needs, even though it is a crude oil exporter. It is also facing shortages after taking delivery of some unusable substandard gasoline.
President Muhammadu Buhari in a letter to the National Assembly in February requesting extra funds to pay for Nigeria’s fuel subsidy said the country’s budget deficit would rise to 4% of GDP as the government eyes new domestic borrowing. The deficit was originally set at 3.42% of GDP.
Ahmed said that the government was working with lawmakers to boost revenues and that the rise in oil prices means that borrowings will increase more than planned.