The Nigerian National Petroleum Corporation (NNPC) Limited has stated that Nigeria needs an estimated N6 trillion for fuel subsidies yearly.
Mele Kyari, the Chief Executive Officer of NNPC, expatiating on the budget said, it presently costs N371.3 per liter to import fuel, which is given to oil marketers companies at a subsidized rate of N118 per liter.
He said the difference between N118 and N371.3, which is N253.3 per liter is all on the government.
Kyari said, “For instance, today if you go to the market today to import petroleum, you will be importing at N371.3, while we are transferring to oil marketing companies at N118 to a liter so that they will be able to sell at N165 or N170 at the pump. There is no other way of doing it.
“That means the difference between N118 and N371 is the burden carried by the government, it is not carried by the market and a simple number around this will tell you that we need about N6 trillion every year minimum to cover this gap at the current market condition,” he added.
In the first half of this year, the International Monetary Fund (IMF) raised concerns about the subsidy budget saying that if oil prices continued to rise and urgent measures are not taken, the subsidy fee could surpass N6 trillion.
The IMF Resident Representative for Nigeria, Ari Aisen, said as an oil exporter he is worried that Nigeria is failing at taking advantage of the current increased oil prices to build the country’s reserves. However, he was hopeful about the Dangote Refinery, which he believes would reduce fuel imports and the burden of fuel subsidy when it resumes operation.
According to Zarma Mustapha, the Deputy National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), the cost of petrol in Nigeria is the cheapest in the world, and this is because of the subsidy, he said this huge subsidy expenses by the government through NNPC is becoming unsustainable.
Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address
As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.
The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.
Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.
Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.
To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.
President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.
Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.
First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.
This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.
Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.
Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.
Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.
In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.
The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.
IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health
Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.
The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’
The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.
According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.
The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.
The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.
The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.
In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.
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