FG: We’ve disbursed only N2bn of N5bn subsidy removal palliative to states

The federal government says only N2 billion has been released from the N5 billion loan it offered to each state as a palliative to cushion the impact of the petrol subsidy removal.

Wale Edun, minister of finance and coordinating minister of the economy, spoke on Friday during a press conference in Abuja.

In August, the federal government announced a N5 billion palliative package for each state of the federation, including the federal capital territory (FCT), to cushion the impact of the removal of the petrol subsidy.

Babagana Zulum, governor of Borno, had said the palliative would enable state governments to procure 100,000 bags of rice, 40,000 bags of maize and fertilizers, to cushion the effect of food shortage across the country.

At the press briefing, Edun said the government is aware of the potential negative consequences of releasing all of the palliative funds at once, “so it decided to release them gradually”.

“On the issue of the 5 billion, it is a combination of grants from the federal government and borrowing by the states,” the minister said.

“And of course, although the sum of 5 billion is earmarked, you will agree with me that to release such funds across all the states all at once will be self-defeating because it will lead to an inflationary spiral. It will lead to the cost of goods being sold going up and it will affect the exchange rate.

“And so, it is N2 billion that has been released as an initial intervention and FCT will be included is the information that I have.”

FG PLEDGES OF EFFECTIVE DEBT MANAGEMENT, BORROWING TO BE ‘LINKED TO RETURN ON INVESTMENT’

Edun also said the government would effectively manage debt, assuring that borrowings will be “linked to return on investment”, under the current administration.

The minister said the current administration intends to increase revenue.

In achieving this, he said tax revenues will improve, leakages will be avoided as well as the effective management of debt so that borrowings can be properly serviced.

“The key is to increase revenues so that the government has enough funding to carry out its obligations and to stabilise the economy as a whole,” the minister said.

“On one hand, it is by increasing tax revenue, not by increasing taxes necessarily, but by bringing greater efficiency.

“We have with us the chairman of the tax reform committee, and it aims to bring greater efficiency to cut leakages and maximise the legitimate revenue that should come to the government.

“Likewise, in order to gain and build public trust, there will be an emphasis on efficiency in government expenditure, and similarly, effective debt management, so that borrowing is linked to it, the return on investment. You borrow and you will see the cash flow that will repay that borrowing.

“Overall, I would say Mr. President is going to deliver a better life to Nigerians by encouraging investment that increases productivity, that brews the economy and thereby creates jobs and reduces poverty.”

Speaking on President Bola Tinubu’s major economic points, the minister said “the key priorities are to improve the lives of Nigerians by providing food security by ending poverty”.

He said Tinubu’s plan for the economy is economic growth, job creation, and access to capital — “particularly consumer credit that makes goods affordable to the average Nigerian”.

“Utilising our human resources — our vast, capable human resources — by focusing on inclusivity (women, youth) and making all have the opportunity to contribute to prosperity and likewise focusing on security, rule of law, and corruption,” Edun said.

“He intends to create a fairer, safer playing field for all.”