Experts to Buhari: remove petrol subsidy,cut interest rates

Foreign and local economic experts have said President Muhammadu Buhari should put at the top of his second -term agenda the removal of petrol subsidy as well as the reduction of interest rates in a bid to stimulate investments and economic growth .

Experts at Agusto & Co Limited , a credit rating agency , said in a report on Tuesday that the country “ is currently in a dire fiscal strait and the numbers are quite grim . ”

“ For instance , despite the positive spin about Nigeria ’ s benign debt to Gross Domestic Product currently around 20 per cent , interest payments as a percentage of revenue are over 60 per cent , ” they said .

The Lagos – based rating agency said Buhari ’ s government would have to work to raise revenue while also restructuring government spending.

It said , “ All options on the table for Mr Buhari in his last term are hard choices with no easy way out. For instance , Nigeria ’ s current fuel subsidy regime indicates the country may have re – adopted opaque practices of the past that not only create a huge fiscal hole but a morass as well .

“ With subsidy payments probably in the range of N 1 . 2 tn – N 1 . 3 tn annually , the country is obviously hemorrhaging especially amidst the steep opportunity costs.

Mr Buhari will not only have to stop this fiscal hemorrhage but also muster the political will to deregulate the downstream petroleum industry once and for all. ”

According to Agusto & Co , some of the big issues that will make or mar Buhari ’ s economic records will be the management of subsidies and other cost – unreflective tariffs being stifled by price controls .

“ These reforms will require the removal of subsidies on the pump price of petrol , allow market forces to determine the domestic price of natural gas , allow electricity tariffs that enable operators to earn margins on their costs and also ensure exchange rates reflect fundamentals .

These reforms could help stimulate investments across the board and unlock economic growth , ” the experts added .

They said the Buhari administration should seek to improve efficiencies in the economy by concessioning key infrastructure and eliminating monopolies of state – owned enterprises in key sectors such as aviation (airport ownership and management) , railway and electricity transmission by opening up the sectors to private sector investments.

The Global Chief Economist , Renaissance Capital , Charlie Robertson, in an emailed note on Tuesday, said Nigeria would require a doubling of oil price or industrialisation to achieve real per capita GDP growth of four to six per cent ( i . e . headline GDP growth of seven to nine per cent ).

He said , “ Without it , per capita GDP growth may be around zero per cent , which implies headline GDP rising at roughly three per cent annually.

“ To achieve industrialisation , Nigeria needs to raise the adult literacy rate from 60 per cent to 70- 80 per cent – which we think can happen from 2024 onwards; treble electricity consumption – which we assume requires at least a doubling of the electricity tariff, and double the investment rate from 13 per cent of GDP to 26 per cent of GDP – or triple it , to match what Ethiopia is doing . ”

Robertson added , “To double the investment rate, we suggest that reforms may be needed , like removing the implicit fuel subsidy that costs about 0 . 5 per cent of GDP . It supports consumption and not investment . ”

He said the government should “ boost domestic savings and bring down interest rates which will probably require a smaller budget deficit and higher taxes , and encourage foreign direct investment , which in 2018 fell to $ 2 . 2 bn , according to the United Nations Conference on Trade and Development .

“ Ghana got $ 3 bn. To match Ghana (per capita ), Nigeria should be getting $ 24 bn a year . A change of approach to MTN , the oil majors and others may be required. ”

According to Robertson, the naira should be allowed to trade closer to fair value , estimated today at N 440 / $ , N 470 by year – end and N 670 by end – 2023 .

“ Allowing faster currency depreciation does partly contradict point 3 on cutting interest rates , ” he added .

145 thoughts on “Experts to Buhari: remove petrol subsidy,cut interest rates

  1. Hello! I’ve been following your weblog for a while now and finally
    got the courage to go ahead and give you a shout out from
    Lubbock Texas! Just wanted to say keep up the excellent

  2. Hi! This is my 1st comment here so I just wanted to give a
    quick shout out and say I truly enjoy reading your articles.
    Can you suggest any other blogs/websites/forums that go over the same subjects?
    Appreciate it!

  3. I was recommended this blog by way of my cousin. I am
    now not positive whether this publish is written through him as no
    one else recognise such precise about my trouble. You’re wonderful!

    Thank you!

  4. Hello there! Do you know if they make any plugins to assist with Search Engine Optimization? I’m trying to get
    my blog to rank for some targeted keywords but I’m not
    seeing very good gains. If you know of any please share.
    Thank you!

  5. I was curious if you ever thought of changing the layout of your site?

    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people could connect
    with it better. Youve got an awful lot of text
    for only having 1 or two pictures. Maybe you could space it
    out better?

  6. Generally I don’t learn post on blogs, however
    I wish to say that this write-up very forced me to check out and do so!
    Your writing taste has been amazed me. Thanks, quite nice article.

  7. I’ve been exploring for a little for any high quality articles or blog posts
    on this kind of space . Exploring in Yahoo I at last stumbled
    upon this site. Studying this information So i am glad to exhibit that I’ve an incredibly excellent uncanny
    feeling I found out exactly what I needed. I so much surely
    will make certain to don?t disregard this website and give it a glance on a
    constant basis.

  8. I’ve been surfing online greater than 3 hours
    lately, but I never found any attention-grabbing article like yours.
    It’s lovely price sufficient for me. Personally, if all web owners and bloggers made good content material as you probably did,
    the web will probably be much more helpful than ever before.

  9. Simply desire to say your article is as astounding.
    The clarity for your post is simply excellent and that i could suppose you’re knowledgeable in this subject.
    Well with your permission allow me to seize your feed to keep updated
    with imminent post. Thank you a million and please keep up the enjoyable work.

Leave a Reply

Your email address will not be published. Required fields are marked *

Notice: ob_end_flush(): failed to send buffer of zlib output compression (0) in /home/loudspea/public_html/wp-includes/functions.php on line 4757