Bismarck Rewane, chief executive
officer of Financial Derivatives Company Limited, has asked Nigerians to brace
up for an increase in the pump price of petrol.
In 2016, the Buhari
administration increased a litre of petrol from N87 to N145, sparking criticism
among citizens.
But making a presentation at the Lagos Business School, Rewane said
there were indications that the price of fuel would rise because government is
working towards reducing subsidy payments.
He described subsidies as a huge
drain on government’s revenue, adding that the World Bank put Nigeria’s total
subsidy bill in 2018 at N731 billion.
“A gradual reduction in subsidy
payments is anticipated. Only N305bn set aside for under-recovery in 2019
budget; expect an increase in the pump price of fuel,” he said.
“Forty per cent shortfall in
provision for subsidies (under-recoveries) points to possible price increases.”
Rewane added that hike in price
of petrol would result in high inflationary pressure.
He described the 2019 budget as
counter-cyclical, saying the economy was in dire need of a boost.
He said with expenditures much
higher than sustainable revenues, the fiscal deficit had widened by 2.15 per
cent to N1.9tn, adding that the supplementary budget could not be avoided.
“Oil revenues are projected to
decline due to the impact of OPEC quota on Nigeria’s oil output level,” he
added.
On the new minimum wage, he said
internally generated revenue remains the key to funding it, adding that it is
not sustainable to rely on the federal accounts allocation committee (FAAC).
Rewane said the capacity of the
economic management team will determine the success of President Muhammadu
Buhari in the second term.
He projected that Buhari would
have unveiled his cabinet by June, saying “the post cabinet selection
squabbling will lead to splintering of the All Progressives Congress”.
Rewane added that the election
tribunal results will “upset at least four governorship races”.
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